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Emerging Themes in Investment Policy

Emerging Themes in Investment Policy. New challenges and their consequences. Ivan Nimac , Head Vienna Office Investment Climate Department World Bank Group. Investment Policy Global Workshop Vienna, 14 th May 2012.

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Emerging Themes in Investment Policy

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  1. Emerging Themes in Investment Policy New challenges and their consequences Ivan Nimac, Head Vienna OfficeInvestment Climate DepartmentWorld Bank Group Investment Policy Global Workshop Vienna, 14th May 2012

  2. Emerging Marketsbenefitmostfromtheslowrecoveryof FDI flows in theaftermathofthe global economiccrisis • Global FDI inflowsrecoverslowly after the global economicdownturn, but are still well belowthepre-crisisaverage • Forthefirst time everdevelopingandtransitioneconomiesattractedmorethan 50% of total FDI flows • Change in investment portfolio (last two years in %) Developed countries Developing countries • Global FDI Inflows (US$ Trillion) • Source: AT Kearney Foreign Direct Investment Confidence Index 2012 15% • Large and medium sizedemergingmarketsareabletobenefitmostfromtheslowrecovery • In particular China, IndiaandBrazilare in theleadof a trendthatisexpectedtocontinueoverthenextyears • Source: United Nations Conference on Trade and Development (UNCTAD)

  3. Especially in turbulent times, an attractiveandstablebusinessenvironmentis a keyconcernforinvestors • Internationalinvestorslookat a favorable andstablebusinessenvironmentwheninvestingabroad, andespecially in turbulent times, strong protectionbytheruleoflaw • Yet, the investment policy framework remains weak in many developing countries according to various data sources • Key location factors for investors (812 respondents) • Major obstacles for investors (% of respondents) • Source: Ernst & Young’s 2011 European attractiveness survey • Source: World Investment and Political Risk 2010, Multilateral Investment Guarantee Agency (MIGA)

  4. Linking Competitiveness Analysis to Investment Policy DETERMINANTS OF COMPETITIVENESS APPROPRIATE ROLE FOR GOVERNMENT SECTOR/INDUSTRY ANALYSIS • Industry trends • Market trends • Price trends • Competition and ownership policy • Links to national/global • supply chains • Technological trends • Global policy trends • (WTO/AFTA) • Price Factors • Factor costs • Input costs • Finance availability/cost • Transaction costs • Taxes andcustoms duties • Investment law • Non-tariff barriers • Utilities service quality, price • Regulatory barriers • Market structure & competition • policy • Factor market rigidities • (e.g., min. wage) • Price controls/subsidies • Product quality standards • Risk • Productivity Factors • Skills • Innovation • Management • Infrastructure Private Sector Public Policy

  5. Emerging Themes in Investment Policy – New challengesandtheirconsequences • The panelists: • Sergiu Ciobanu, DeputyMinister of Economy, Moldova • Alexander Schwartz, Partner, TJP Vienna • RoelSpee, Global Leader, Plant Location International (PLI), IBM Business Services • Robert Whyte, Global ProductSpecialist, Investment Policy, Investment Climate Department, World Bank Group

  6. Thank you! Ivan Nimac Head Vienna OfficeInvestment Climate DepartmentWorld Bank Group Inimac@worldbank.org www.wbginvestmentclimate.org

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