||28 June 2005
IDRC / UNESCAP
Consultative Meeting on
Foreign Direct Investment and Policy Challenges:
Areas for New Research
UN Conference Centre
Bangkok, May 12-13, 2005
- Foreign Direct Investment (FDI) accounts for significant
domestic investment growth in developing countries in Asia,
by increasing capital stock, improving competitiveness through
technology, skills and managerial practices, and providing
access to more markets. Unfortunately, not all countries
in the region benefit equally from international investment
flows. Investment policy regimes vary in terms of openness,
regulatory environment, institutional development, incentive
structures and other relative conditions for stimulating
growth and development – such as infrastructure, social
consensus, governance, bureaucratic red tape, etc. - all
of which significantly enhance transaction costs.
- FDI flows to Asia have risen dramatically over the past
two decades as a result of increasing openness (declining
post financial crisis but again rebounding post 2000). However,
the distribution and character/composition of investments
have been uneven, with most expectedly flowing towards the
higher growth / income economies. Also, FDI in services
now account for the largest share, and this is presenting
new kinds of challenges in terms of economic and social
impacts. As addressed in the World Investment Report 2004,
services FDI requires careful management and regulatory
regimes for sustainable developmental benefits to accrue.
- The challenges facing most developing countries in Asia
are no longer in terms of liberalization, or offering tax
incentives, but rather in terms of developing an enabling
environment which address issues of national treatment,
domestic policies, governance and anti-corruption, intellectual
property rights, competition policy, education, rights,
and so on. These issues are accorded significant policy
importance by governments, but there is relatively little
empirical analysis to advise policy makers on optimal policy
choices which are coherent with national interests and development
FDI research areas of interest
- Against this background, IDRC is interested to support
development research projects on FDI in the Asian region
which are empirical and policy oriented and which focus
on the real policy issues for Asia and the Pacific, over
and above the general global ones. Recognizing that much
work has already been done on trends, flows, liberalization
of restrictions, and the like, there is interest in supporting
new substantive work on a range of topics, which could include
the issues below. To meet this end, presenters should focus
on areas of future research and take this opportunity to
receive feedback and comments on their current or future
- FDI in services: outsourcing; production networks;
ranging patterns and composition (e.g. non-equity forms);
- Determinants and impacts of outward investments
of developing countries: internationalization of Asian firms
and SMEs; role of developed countries in the region.
- FDI and corporate social responsibility (CSR) linkages:
challenges and prospects in the Asian context.
- Investment Policy Regimes in Asia: openness; competition
policy; regulatory environment; changing policy regimes;
- The developmental contributions of trans-national
corporations and how to maximize them.
- Rules: investment agreements; national treatment;
prospects for a regional or multilateral agreement; development
- Social dimensions: FDI in EPZs; social and distributional
effects; employment issues and the labour market; FDI and
- Economic impacts: on the national economy; on firm
behaviour; competition, productivity, standards, finance,
human capital, etc.
- The commercial environment (openness, ownership
structures, regulatory issues, links to trade and local
economic activity; etc.).
- Promoting FDI in environment friendly technologies
for sustainable development and economic growth; FDI and
environmental regulation: race to the top or the bottom?
The topics are not exhaustive and new challenges arise
as FDI seeks out new and profitable niches in Asia. New
perspectives and approaches, such as looking at institutional
and transaction cost factors in decision making, could be
helpful in contributing to the debate and to better policy
formulation and implementation.
- The consultative meeting facilitated dialogue and
an open exchange of ideas by the participants on a range
of important FDI policy issues for the region.
- The objective of this consultative meeting on FDI was
principally to bring together a select group of regional
experts from research institutions, governments, and international
agencies to discuss the key policy issues underlying the
character and impact of FDI in Asian economies. Tthe meeting
facilitated networking on FDI research in Asia.
- Tthe meeting led to increased understanding of some
of the critical research areas and policy challenges facing
FDI in Asia, and potentially a framework for future research
involving regional, and country-specific studies.
- The workshop report produced at the conclusion
of the meeting documents, the proceedings, including
research papers, current initiatives, arrangements for future
research, and networking among the workshop participants.
- The meeting was held in Bangkok on May 12-13, preceding
the UNESCAP sponsored Asia-Pacific Business Forum (May 13-15).
IDRC, in association with UNESCAP, was the convenor
for the meeting. The costs of the meeting was met by
- UNESCAP hosted the meeting and provided the facilities.
The participants to the meeting took the opportunity to attend the Business Forum.
Representatives from ADB and UNESCAP participated and
advised on the program and issues under discussion.