Excellencies

Ladies and Gentlemen

 

I am deeply honoured and pleased to be among you at this important gathering. Let me first say how grateful I am to James Zhan, Director, Division on Investment and Enterprise, UNCTAD, for inviting me to contribute to the discussions at this Investment Advisory Council Breakfast.

 

 

 

 

This event could not have taken place at a better time given the growth and poverty reduction experiences of the last decade as well as the current global economic environment. My intervention will focus primarily on the three groups of countries of countries under the purview of my Office, namely the least developed countries, the landlocked developing countries and small island developing states.

 

Excellencies,

Ladies and Gentlemen

 

Many LDCs, LLDCs and SIDs witnessed a strong economic growth during much of the last decade. Yet this strong economic performance did not always translate into meaningful employment creation and significant poverty reduction. As economic growth is decelerating in these countries, concerns over unemployment and poverty have mounted further.

 

Against this backdrop, the challenge for these countries is to secure strong and sustainable economic growth that will enable millions of poor and vulnerable people to lift themselves out of poverty, hence the need for pro-poor investment as a tool to achieve this.

 

To be pro-poor, investment should be channelled to sectors where poor people are active and/or sectors that use production factors that the poor possess in excess. Sectors that typically meet these pre-conditions include agriculture, services—particularly tourism—and, to some extent and under some conditions, mining as well. These sectors are those where LDCs, LLDCs and SIDs potentially have a comparative advantage in.  As these countries differ, sectors that should receive special attention should also vary depending on country conditions. Pro-poor investment requires not only focusing or on these sectors but also ensuring that value addition and creation of linkages with the other sectors of the economy.

 

Excellencies,

Ladies and Gentlemen

 

The question then is how to do this?

 

 

 

 

A good investment climate is required.  Good investment climate includes conducive policy and regulatory environment, adequate physical infrastructure and the improvement of the asset base of the poor.

 

Conducive policy and regulatory environment to pro-poor investment should not be viewed only through broarder terms, including sound macroeconomic policies, effective enforcement of contracts and protection of property rights, but also through selective policy and regulatory measures intended to leverage the contribution of specific sectors to growth, development and poverty reduction. These measures include incentives to encourage value addition and retention. One example of such incentives is the investment promotion regimes put forward in the Istanbul Programme of Action, and in which LDC development partners committed to establishing in favour of their firms seeking to invest in productive capacity development in LDCs. Another example is the mix of incentives to encourage the formation of new local enterprises linked to transnational corporations, either through supply goods and services and processing the raw commodities before exports.

 

 

 

 

In addition to incentives to create linkages and fostering knowledge flows between large-scale firms—often transnational corporations —and local small and medium sized firms,  care must be taken to increase the capacity of LDCs, landlocked developing countries and small island developing states to negotiate and enforce contracts in their extractive industries. This is important as the extra government revenue generated could help finance infrastructure development and human capital formation, which will be ultimately help increase the return of capital and foster private investment.

 

Indeed and more broadly the potential for value chain development in agriculture, tourism and mining could be tapped if efforts are made to ensure adequate and appropriate infrastructure, including access to reliable electricity supply, efficient transport links and modern telecommunications services.

 

Improved asset base of the poor should complement these efforts. This implies expanding of educational opportunities, particularly beyond the primary education, improved gender equality, better access to land and greater access to credit.

 

Excellencies,

Ladies and Gentlemen

 

With these few thoughts, I look forward to productive and lively discussions.

 

I thank you for your kind attention