Foreign Direct Investment: attract more to benefit more Khalil Hamdani Istanbul, 20 November 2013

OIC countries can be more active in FDI (UNCTAD data, inflows, billions of dollars)

OIC countries are now more open to FDI (UNCTAD data, inflows, percent of GDP)

OIC country experiences vary by region (UNCTAD data, inflows per capita, dollars)

African members rely on FDI more for capital formation (UNCTAD data, inflows, percent of gross fixed capital investment)

Largest OIC recipients of FDI

Largest OIC providers of FDI

Intra-OIC FDI: acquisitions have slowed (UNCTAD data, billions of dollars)

Intra-OIC FDI: main buyers (cross-border acquisitions)

Intra-OIC FDI: main locations (cross-border acquisitions)

Intra-OIC FDI: greenfield projects (UNCTAD data, estimated capital expenditure, billions of dollars) world

Intra-OIC FDI: main industries (UNCTAD data, greenfield projects, , capital expenditure, billions of dollars)

Intra-OIC FDI played an important role (UNCTAD data, billions of dollars)

OIC countries can be more active on outward FDI (UNCTAD data, outflows, percent of GDP)

Intra-OIC FDI potential: current account surplus (UNCTAD data, billions of dollars)

More open investment policies Reduction of barriers to FDI (opening up more sectors to foreign investment, lifting of ownership restrictions, employment of non-nationals, etc) Strengthening of standards of treatment (national treatment, legal protection to foreign investors, etc) Enhancing the functioning of the market (supervision of banking and financial services, protection of intellectual property rights, environmental standards, etc) Investment promotion and facilitation (image building, one-stop service, aftercare, policy advocacy, etc) Incentives

An improved investment climate Linkages policies and programmes Strengthening hard and soft infrastructure Strategic FDI attraction Strategic policy coordination Source: Altenburg, Investment strategy

Investment strategy: an example Shift from a natural resource-based to a knowledge-based economy Diversify industrial base Target biotechnology, pharmaceuticals and petrochemical products Encourage SMEs and entrepreneurship development Develop clusters of knowledge-based activities

BACKWARD SUPPLIERS FORWARD CONSUMERS TNC Work with existing investors PRODUCT STEWARDSHIP SUPPLY CHAIN MANAGEMENT AAA Improved productivity Higher incomes for suppliers Reduced costs for company Better products for consumers Enlarged market share for company The greater the linkages between foreign affiliates and local enterprises and public institutions, the greater the spillovers into the domestic economy.

Enhancing FDI benefits Channels  Education and training  Support for SMEs  Backward linkages  Linkages with technology partners  Forward linkages with customers Participation in global supply chains  Outward investment Benefits  Production efficiency  Productivity growth  Technological and managerial capabilities  Entrepreneurial activity  Market diversification  Upgrading of production  Export growth

Incentives Carefully targeted, strategic incentive packages may be relevant and useful to: enhance the benefits from investment and trade in extractive industries. diversify industrial and export base. attract FDI into infrastructure, manufacturing and services. create linkages between FDI and domestic investment.

Recommendations encourage investment among the OIC countries, through intergovernmental agreements, financing facilities and joint investment projects to improve cross-border transactions and infrastructure. Mandate your envoys in OIC countries to promote intra-OIC FDI. expand knowledge sharing within the OIC on FDI, using existing institutions and involving private sector. Intensify cooperation among investment promotion agencies. generate reliable data on FDI at the country level that is comparable across OIC countries in conformity with international standards.

Intra-OIC FDI, trade and development (UNCTAD data, current account net, 2012, billions of dollars, for 57 OIC countries ) Intra-OIC trade and development