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Transnational Corporations and the Infrastructure Challenge in Africa Session 37 Achieving the Millennium Development Goals in Africa: Should Service Linkages ... – PowerPoint PPT presentation

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1
  • Transnational Corporations and the
    Infrastructure Challenge in Africa
  • Session 37
  • Achieving the Millennium Development Goals in
    Africa
  • Should Service Linkages Be Expanded?
  • 17 September 2010

Kalman Kalotay UNCTAD Investment Policies Branch
2
Why investment in infrastructure is important
in all countries
  • Efficient infrastructure services are crucial for
    competitiveness and economic growth in all
    countries, rich and poor
  • Good quality infrastructure is essential for
    international trade and integration into the
    world economy
  • Access to affordable infrastructure services,
    such as electricity and drinking water, is an
    important determinant of living standards
  • The development of infrastructure helps to
    eliminate poverty and attain the UN Millennium
    Development Goals
  • Low-income countries (in Africa and partly in
    Asia) have huge infrastructure investment needs
    but lack the necessary capacity domestically to
    meet them

3
Share of foreign investors in infrastructure
industries of developing and transition economies
varies quite important in AfricaCommitments in
19962006,
4
Regional composition of investment commitments in
infrastructure in developing economiesA shift
away from Latin America and the Caribbean Africa
rising from a low level
Source UNCTAD, World Investment Report 2008,
Transnational Corporations and the Infrastructure
Challenge.
5
Least developed countries are still marginalized
in FDI in infrastructure
  • Least developed countries (LDCs) attract little
    investment from infrastructure TNCs
  • LDCs had less than 1 of world FDI stocks in
    infrastructure in 2006
  • only 5 of world FDI inflows in infrastructure
    in 2006
  • and 5 of the total foreign commitments in
    infrastructure in developing and transition
    economies over the period 1996-2006.
  • Reasons
  • TNCs require sufficient returns on their
    investments
  • Commercial and non-commercial risks
  • Small local markets (investment in infrastructure
    is normally market orientated)
  • Competition with other (developing) economies

6
The universe of infrastructure TNCs is changing
  • Increasing number of private and state-owned TNCs
  • Important role for TNCs from the South
  • Especially in ports and telecommunications
  • Significant in LDCs
  • Sometimes investment in infrastructure and
    extractive industries is complementary
  • Rise of new financiers in infrastructure
    industries
  • Private equity firms
  • Sovereign wealth funds

Chinese and Indian investments in infrastructure
in Africa, up to April 2008
7
Leveraging TNC participationPolicy challenges
and options
  • Creating strong, transparent and accountable
    institutional and regulatory frameworks
  • Sequencing of reform
  • Assessing options and negotiating with TNCs
  • Building necessary capabilities to deal with
    public-private partnerships
  • Involving TNCs in infrastructure places more,
    rather than less, responsibility on public
    officials.
  • ODA to infrastructure
  • Better use of available funds
  • Readiness to take risk
  • More capacity-building
  • Evaluating options
  • Negotiations with TNCs
  • Role for the UN?
  • Risk-mitigation targeted to low-income countries
  • Support to regional projects
  • Keep all options open

8
Source of more information
Visit UNCTAD websites www.unctad.org/diae and
www.unctad.org/wir www.unctad.org/fdistatistics
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