Global Agenda Council on Global Trade & FDI 2012-2014
Foreign direct investment (FDI) is a powerful instrument for growth and development. Today, it is recognized as a crucial driver of trade, via global value chains. FDI increases investment flows, which boosts the global economy, creates jobs, promotes knowledge and increases productivity. Statistics from the United Nations Conference on Trade and Development (UNCTAD) and the International Monetary Fund show that worldwide FDI grew by an annual average of 9% between 2000 and 2011. This correlates positively with the global average gross domestic product (GDP), which grew by an average of 7% in the same period. In addition, a UNCTAD study reports a significant correlation between levels of inward FDI and participation in global value chains.
What the Council is doing about it
This year, the Global Agenda Council on Global Trade & FDI produced a report, “Foreign Direct Investment as a Key Driver for Trade, Growth and Prosperity: The Case for a Multilateral Agreement on Investment”. Building on the work done in previous years, the Council’s aim was to identify ways of enhancing prosperity worldwide by encouraging more FDI inflows to both developed and developing countries. The Council reached two main conclusions. First, different barriers and distortions are preventing the realization of FDI’s full potential. Second, the current fragmented governance of FDI is not the best means to tackle those barriers and distortions. This fragmentation is an obstacle in itself and contributes to the confusing landscape facing investors.
The Council makes a strong case in its report for a multilateral agreement on investment. Although previous attempts to negotiate such an agreement have been unsuccessful, the Council is convinced that the global situation has changed. In particular, the rise of emerging economies and the spread of global value chains have shifted the North-South debates that doomed previous efforts. Today, the convergence of political, economic and technological trends has created the right circumstances to pursue a multilateral agreement on investment.
“FDI increases investment flows, which boosts the global economy, creates jobs, promotes knowledge and increases productivity.”
The Council’s view is that a multilateral agreement on investment should be negotiated within the World Trade Organization (WTO), where all member countries could express their views. It could also result in an agreement with near universal coverage. The Council recommends that WTO members establish a working group on investment regulations whose goal would be to identify and clarify the key facts, issues and effects. This could potentially lead to the development of a work programme.This term, the council will continue the dissemination of the report, as well as draft a new report on the role of mega-regional trade agreements.
To get involved please contact
Research Analyst: Daniel Akinmade Emejulu, Global Agenda Councils, Daniel.Emejulu@weforum.org
Council Manager: Caroline Ko, Economist, Global Competitiveness and Benchmarking Network, firstname.lastname@example.org
Forum Lead: Margareta Drzeniek, Director, Lead Economist, Global Competitiveness and Benchmarking Network, Margareta.Drzeniek@weforum.org
Document archive for all the issues you are interested in
- Stimulating Trade, Stemming Protectionism
- What's Next for Trade?
- Ensuring Growth by Enabling Trade
- Preventing Trade Barriers and Protectionism: A Regional Imperative
- A Global Solution to Illicit Trade?
- Produce Local, Trade Regional, Sell Global
- Trade and Integration in the Americas
- A New Approach to Catalysing Africa's Trade Agenda