VIENNA, Austria – A new World Bank report says reducing risks in the Caribbean and other developing countries is key to spurring investment and growth.
The report says a stable business environment, effective regulations and political stability are among significant drivers of foreign direct investment (FDI) into developing countries.
The survey of 750 executives of multinational corporations is part of the Global Investment Competitiveness Report 2017-2018, the first of a biennial series exploring the drivers of investment competitiveness in developing countries, the World Bank said.
The report was launched earlier this week at the World Bank’s Investment Competitiveness Forum here that brought together corporate executives, donor partners, and academics, and senior policymakers of developing countries that have implemented significant investment policy reforms.
The report finds that international investors prioritise political stability, security, macroeconomic conditions, and conducive regulatory environment when deciding where to make investments that can spur growth and create jobs.
“A business-friendly legal and regulatory environment – along with political stability, security, and macroeconomic conditions – are key factors for multinational companies making investment decisions in developing countries,” said Anabel Gonzalez, senior director of the World Bank Group’s Trade & Competitiveness Global Practice.
“Combining a survey of global investors with analysis of investment policy issues makes this report a powerful contribution to our understanding of how developing countries – including fragile states – can de-risk their economies and unlock FDI,” it adds.
The report explores how FDI creates growth opportunities for local firms, assesses the power of tax holidays and other fiscal incentives to attract FDI, analyses characteristics of FDI originating in developing countries, and examines the experience of foreign investors in countries affected by conflict and fragility, according to the World Bank.
Combining first-hand investor perspectives with extensive research and data analysis, the report highlights the importance of a conducive and low-risk investment climate for multinational as well as local companies.
It recommends specific reforms that can help countries attract foreign investment and maximize its benefits for development, according to the World Bank.
“The ‘Global Investment Competitiveness Report’ goes beyond an examination of broad trends in foreign investment. It explores key drivers of FDI in depth,” said Ted H. Chu, the World Bank’s International Finance Corporation (IFC) chief economist. “It also offers practical and actionable recommendations to help developing countries ensure they get the most out of international investment.”
The World Bank said the effort to increase FDI flows into developing countries reflects the importance of the private sector in meeting global development goals. (CMC)