world investment report 2013 - .: mida · 2018-01-31 · 19 kazakhstan (27) 18 colombia (28) 17...

6/27/2013

1

1

WORLD INVESTMENT REPORT 2013

Global Value Chains: Investment and Trade for Development

EMBARGO 26 June 2013

17:00 hrs GMT

Masataka FujitaUNCTADDivision on Investment and Enterprise Kuala Lampur, 26 June 2013

2

Contents

• Global and regional investment trends

• Recent policy developments

• Global value chains and development

1

6/27/2013

2

3

FDI recovery road proves bumpy, with 18% decline in 2012Global FDI inflows(Billions of dollars)

1,473

2,0031,816

1,2161,409

1,652

pre-crisis

average 2005-

2007

2007 2008 2009 2010 2011

1,351

2012

+ 17% - 18%

Average annual growth rate

2

4

Flows in 2013 are expected to remain close to 2012 level, and could rise in 2014 – 2015Global FDI flows 2004 – 2012, and projections 2013 – 2015 (Billions of dollars)

• Forecasts for 2013

close to 2012 level; upper range at $1.45 trillion aligned with the pre-crisis average

• FDI may slowly

increase to $1.6 trillion in 2014 and

$1.8 trillion in 2015

• However significant

risks to this growth

scenario remain

3

6/27/2013

3

5

Developing economies surpass developed economies as

FDI recipients for the first time FDI inflows by group of economies, 1995 – 2012(Billions of dollars)

0

500

1 000

1 500

2 000

2 500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

52%

World total

Developing economies

Transition economies

Developed economies

42%

4

6

9 of the 20 largest FDI recipients are developing economiesTop 20 host economies, 2012(Billions of dollars)

14

14

16

20

25

26

28

28

29

30

45

51

57

57

62

65

65

75

121

168

20 Sweden (38)

19 Kazakhstan (27)

18 Colombia (28)

17 Indonesia (21)

16 France (13)

15 India (14)

14 Spain (16)

13 Luxembourg (18)

12 Ireland (32)

11 Chile (17)

10 Canada (12)

9 Russian Federation (9)

8 Singapore (8)

7 Australia (6)

6 United Kingdom (10)

5 British Virgin Islands (7)

4 Brazil (5)

3 Hong Kong, China (4)

2 China (2)

1 United States (1)

(x) = 2011 ranking

Developed economies



5

6/27/2013

4

7

Outward FDI from developing economies accounts for

1/3 of global totalShares in global FDI outflows, by group of economies, 2000–2012(Per cent)

6

Developed economies

Developing and transition economies

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

12%

88%

35%

65%

8

China moves up from the sixth to the third largest investor, after the United States and JapanTop 20 investor economies, 2012(Billions of dollars)

17

19

21

21

23

26

30

33

33

37

42

44

51

54

67

71

84

84

123

20 Luxembourg (30)

19 Ireland (167)

18 Norway (19)

17 Chile (21)

16 Singapore (18)

15 Mexico (28)

14 Italy (9)

13 Republic of Korea (16)

12 Sweden (17)

11 France (8)

10 British Virgin Islands (10)

9 Switzerland (13)

8 Russian Federation (7)

7 Canada (12)

6 Germany (11)

5 United Kingdom (3)

4 Hong Kong, China (4)

3 China (6)

2 Japan (2)

1 United States (1)(x) = 2011 ranking



329

Developed economies

7

6/27/2013

5

9

Global FDI drop is due to developed economies, flows into

developing regions remain at their high levelFDI inflows by region, 2010–2012(Billions of dollars)

• FDI flows to developed

countries plummet

• FDI flows to developing economies see a small

overall decline, with some bright spots:

• Africa bucks the trend

• Developing Asia loses growth momentum, but remains at historically high levels

• Latin America and the Caribbean register a small decline

• FDI is on the rise in structurally weak

economies

• Transition economies see a relatively small decline

8

FDI inflows

2010 2011 2012

World 1 409 1 652 1 351

Developed economies 696 820 561

Developing economies 637 735 703

Africa 44 48 50

Asia 401 436 407

East and South-East Asia 313 343 326

South Asia 28 44 34

West Asia 59 49 47

Latin America and the Caribbean 190 249 244

Oceania 3 2 2

Transition economies 75 96 87

Structurally weak, vulnerable and small economies 45 56 60

LDCs 19 21 26

LLDCs 27 34 35

SIDS 5 6 6

Region

10

All the three sectors see a decline, but the services sector remains resilientFDI projects inflows by sector(Billions of dollars)

Primary

Manufacturing

Services

Value of greenfield projects, 2011–2012 Value of cross-border M&As, 2011–2012

76 25

453

264

385

323

2011 2012

13747

205

137

214

124

2011 2012

- 16%

- 33%

- 42%

- 67%

- 42%

- 45%

- 33%

- 66%

9

6/27/2013

6

11

International production continues to grow at a steady

pace

72 million of employees

$26 trillion of sales

$7 trillion of value added

(~9% of global GDP)

$87 trillion of managed assets

Change vs. 2011

+6%

+7%

+6%

+4%

Selected key performance indicators, foreign affiliates of TNCs, 2012

10

International production of TNCs continues to expand at a steady rate because FDI flows, even at lower levels, add to the existing FDI stock

12

Contents




11

6/27/2013

7

13

Changes in national investment policies, 2000 – 2012(Per cent)

Most countries remain keen to attract FDI while

becoming more selective and reinforcing regulatory

frameworks

0

25

50

75

100

94%

Liberalization/promotion 75%

6%

Restriction/regulation 25%

12

14

The number of newly signed IIAs continues to decline but the total number has reached 3,196 Trends in IIAs, 1983–2012

13

6/27/2013

8

15

Contents




14

16

Trade is increasingly driven by global value chains (GVCs), leading to a significant amount of double counting

Global gross exports “Double counting”(foreign value added in

exports)

Value added in trade

~19 ~5

~14

28%

ESTIMATES

Value added in global trade, 2010(Trillions of dollars)

15

6/27/2013

9

17

The contribution of GVCs to economic growth can be

significantDomestic value added in trade as a share of GDP, by region, 2010(Per cent)

30%

14%

27%

22%

16%

37%

18%

24%

25%

30%

28%

13%

12%

26%

18%

22%

Least Developed Countries

Memorandum item:

Transition Economies

South America

Caribbean

Central America

Latin America and Caribbean

West Asia

South Asia

East and South - East Asia

Asia

Africa

Developing Economies

Japan

United States

EU

Developed Economies

Global

Developing country average

26%

16

18

GVCs are typically coordinated by TNCs

Global trade in goods and services

Non-TNC trade

All TNC-related trade

Intra-firm trade TNC arm's length trade

TNC-related trade:

~80%

ESTIMATES

NEM-generated trade, selected

industries

Global gross trade (export of goods and services), by type of TNC involvement, 2010(Trillions of dollars)

~ 19 ~ 4

~ 15 ~ 6.3

~ 2.4

~ 6.3

17

6/27/2013

10

19

The presence of TNCs drives GVC participationCorrelation between inward FDI stock and GVC participation, 187 countries, 1990 – 2010

18

20

FDI shapes patterns of value added in tradeKey value added trade indicators (median values), by quartile of FDI stock

relative to GDP, 2010

1st quartile

(Countries with high FDI stock relative to GDP)

2nd quartile

3rd quartile

4th quartile

(Countries with low FDI stock relative to GDP)

Foreign value added in export

18%

17%

24%

34%

Value added contribution of

trade to GDP

21%

24%

30%

37%

19

6/27/2013

11

21

Longer term, the ideal development path involves not just

participation but also domestic value added creationGDP per capita growth rates for countries with high/low growth in GVC

participation, and high/low growth in domestic value added share, 1990-2010

GVC participation

growth rate

Growth of the domestic value added

component of exports

Low

Low

High

High

+ 2.2% + 3.4%

+ 0.7% + 1.2%

+ n.n%median GDP per capita growth rates

=

20

22

A number of factors and conditions may facilitate ‘climbing’ the GVC development ladder

Resource-

based

Low-tech

manufacturing, basic services

Mid-level

manufacturingand services

Sophisticated

manufacturingand services

Knowledge-

based services

Integrating

• Enter (increase relative

importance of) more

fragmented GVCs • Increase exports of

intermediate goods and

services

Upgrading

(Focus on product and process upgrading)

• Increase productivity and

value added produced within

existing GVC segments

Upgrading

(Focus on functional and

chain upgrading)

• Move to (or expand to) higher

value segments in GVCs• Move to (or expand to) more

technologically sophisticated

and higher value GVCs

GVC development stages

• Effective national innovation system, R&D

policies, and intellectual property rules• Presence of TNCs capable of GVC

coordination and a domestic and

international supplier base• Pool of highly trained workers

• Presence of domestic supplier base fully integrated in multiple GVCs (reduced

reliance on individual GVCs)

• Absorptive capacities at higher technology levels, capacity to engage in R&D activities

• Pool of relatively low-cost skilled workers

• Availability and absorptive capacities of

domestic supplier firms and partners

• Reliable basic infrastructure services (utilities and telecommunications)

• Pool of relatively low-cost semi-skilled

workers

• Conducive investment and trading

environment

• Basic infrastructure provision• Pool of relatively low-cost workersValue creation

Pa

rtic

ipa

tion

Value creation

Pa

rtic

ipat

ion

Value creation

Pa

rtic

ipa

tion

(i) Participation/ value

creation archetypal

moves

(ii) Share of exports by level of technological sophistication

21

6/27/2013

12

The contribution of GVCs to development can be significant,

however participation in GVCs also involves risks

• Value added trade contributes nearly 30 per cent to developing countries’ GDP on average

• There is a positive correlation between participation in GVCs and growth rates of GDP per capita

• GVCs have a direct economic impact on value added, jobs and income

• Participation in GVCs can help countries’ acquisition and dissemination of technologies and skills, and spread international best practices, including on social and environmental issues, e.g. through the use of CSR standards

• GVCs can also be an important avenue for developing countries to build productive capacity, opening up opportunities for longer-term industrial upgrading

• GDP contribution of GVCs can be limited if countries capture only a small share of the value added created in the chain

• Also, a large part of GVC value added in developing economies is generated by foreign affiliates of TNCs, which can lead to relatively low “value capture”, e.g. as a result of transfer pricing or income repatriation

• Technology dissemination, skill building and upgrading are not automatic. Developing countries face the risk of remaining locked into relatively low value added activities

• Environmental impacts and social effects, including on working conditions, occupational safety and health, and job security, can be negative

• The potential “footlooseness” of GVC activities and increased vulnerability to external shocks pose further risks

22

24

Countries need to make a strategic choice whether or not to promote GVCs

23

• Countries need to carefully weigh the pros and cons of GVC participation, and the costs and benefits of proactive policies to promote GVCs or GVC-led development strategies, in line with their specific situation and factor endowments

• Some countries may decide not to promote GVC participation. Others may not have a choice: for the majority of smaller developing economies with limited resource endowments there is often little alternative to development strategies that incorporate a degree of participation in GVCs . The question for those countries is not so much whether to participate in GVCs, but how. In reality, most countries are already involved in GVCs one way or another

• Promoting GVC participation requires targeting specific GVC segments, i.e. GVC promotion can be selective. Moreover, GVC participation is only one aspect of a country’s overall development strategy

6/27/2013

13

25

Policies matter to make GVCs work for developmentA policy framework for GVCs and development

Embedding GVCs in

development strategy

Enabling participation

in GVCs

Building domestic

productive capacity

Providing a strong

environmental, social

and governance

framework

Synergizing trade and

investment policies

and institutions

• Incorporating GVCs in industrial development policies• Setting policy objectives along GVC development paths

• Creating and maintaining a conducive environment for trade and investment

• Putting in place infrastructural prerequisites for GVC participation

• Supporting enterprise development and enhancing the bargaining power of local firms

• Strengthening skills of the workforce

• Minimizing negative effects and risks associated with GVC participation through regulation, public and private standards

• Supporting local firms in complying with international standards

• Ensuring coherence between trade and investment policies• Synergizing trade and investment promotion and facilitation• Creating ‘Regional Industrial Development Compacts’

24

26

Regional industrial development compacts for regional value chains

Regional trade and investment agreements could evolve into regional industrial development compacts

25

6/27/2013

14

27

Special GVC tables on Malaysia

26

28

6/27/2013

15

6/27/2013

16

Fig .. Value added exports in electrical and electronic equipment from Malaysia, by

domestic, ASEAN and other top four foreign country value added creators, 1990,

1995, 2000, 2005 and 2010

(Per cent)

Source : UNCTAD FDI-TNC-GVC Information System, UNCTAD-Eora GVC database

(www.unctad.org/fdis tatis tics).

0

20

40

60

80

100

1990 1995 2000 2005 2010

Domestic (Malaysia) ASEAN Japan United States

China Korea, Republic of Rest of the World

Domestic

Rest of the world

ASEAN

Top 4(excl. ASEAN)

6/27/2013

17

34

Visit UNCTAD websites:

www.unctad.org/diae

and

www.unctad.org/wir

www.unctad.org/fdistatistics

Thank You!

26

world investment report 2013 - .: mida · 2018-01-31 · 19 kazakhstan (27) 18 colombia (28) 17...

Documents