April 2014 91190 Investment Climate In Practice No. 22 investment Promotion Promoting Foreign Investment in Fragile and Conflict-Affected Situations Fragile and conflict-affected situations1 might appear incapable of attracting significant flows of foreign investment due to their often Robert Whyte Carlos Griffin negative international images and weak enabling environments. However, during the last eight years, foreign investment into these Robert Whyte (rwhyte@ worldbank.org) is the World economies has grown almost three times more quickly than flows into Bank Group’s Lead Specialist for Investment Promotion with over the rest of the world, albeit from a very low starting point.2 Untapped 25 years of experience. He has natural resources, reconstruction needs, and severely underserved worked extensively in countries in Asia over the past decade. consumer demand present domestic and foreign investors with Carlos Griffin (cgriffin1@ifc.org) significant opportunities, many of which continue to go unrealized. This has been a foreign investment note provides guidance to investment policymakers and promoters in and trade consultant to the World Bank Group and various bodies fragile and conflict-affected situations, whose work is needed to bring of the United Nations for the past those opportunities to fruition. eight years. Their combined experience covers over 40 developing countries, including 11 in fragile or conflict- affected situations. People living in fragile and conflict- domestically. FDI may also be a valuable The authors gratefully acknowledge insights provided by affected situations (FCS) are among source of reconstruction financing, tax Paul Barbour, Armando Heilbron, the world’s most disadvantaged. As of revenue, and foreign exchange. Joanna Kata-Blackman, Ganesh 2012, FCS accounted for only 7 percent Rasagam, Cecilia Sager, Markus of the world’s population, but close to However, the public image of FDI in Scheuermaier, Charles Schneider, a third of the world’s poor.3 Two years fragile and recovering states is often Mette Strand Gjerloeff, and Steve before the 2015 deadline for meeting overly associated with extractive Utterwulghe. the Millennium Development Goals, projects and major infrastructure The Investment Climate only 20 percent of FCS had met the concessions. These large-scale, high- Department of the World Bank Group wishes to thank the goals or made sufficient progress,4 grossing projects tend to attract public government of Austria for its indicating that transformational forces attention and may stir resentment ongoing support of the Global are still needed if the outlook is to even when executed and regulated Investment Promotion Best improve. Experience shows that foreign properly. In some cases, low-capacity Practices surveys and other global direct investment (FDI) can be one such governments may negotiate contract initiatives that further knowledge- force; multinational companies can terms poorly or exercise weak sharing on investment generation in developing countries. provide a country with access to capital, oversight, while a few companies jobs, skills, technology, and international engage in activities with potential business networks that are unavailable environmental and social risks. It is a significant challenge to manage such risks while at the same time actively promoting FDI and maximizing Box 1. Who should promote Foreign its benefits, especially for over-burdened governments investment in fragile and conflict situations? tackling economic recovery. However, World Bank Group Overcoming the disadvantages of a fragile situation to attract experience and a review of FDI projects in FCS from investors that would not have otherwise considered such a 2005 to 20125 show the challenge can be met, and location demands strong cooperation from the many public and opportunities open to investors in these situations are more private stakeholders in a position to influence the effort. Securing varied than one might expect. In this period, FCS attracted and marshaling that cooperation require a clear vision and FDI projects in 38 of the 39 sectors (all but semiconductors) strong leadership. In developed economies, traditional investment tracked by the Financial Times. More detailed review of promotion agencies may succeed in this role, but in FCS they are these findings indicates that certain types of investors unlikely to have the capacity or clout to do so, and they are often are consistently interested in FCS, including those with more focused on regulatory tasks. Investment promotion agencies business models based on moving first in new markets, may be an important part of the technical team in FCS, but the role regional investors, diaspora, and institutions that consider of lead investment promoter is often better played by respected nonfinancial motives for investing. leaders with strong knowledge of the country’s target sectors. For example in Haiti, CTMO-HOPE,a a tripartite commission Learning to identify and exploit these opportunities is of business, labor, and government, led the outreach effort to important for governments in a globalized economy. maximize benefits of a U.S. law granting preferential access to The growing tendency toward global value chains has Haitian-made apparel. allowed FCS and developing countries in general to A concerted effort across government to tackle the complete participate in those segments where they are competitive package of reforms necessary to make sectors and subsectors without having to attract entire industries. Learning promotable is critical for success. Identifying reform champions is to attract and manage the relatively few investment an important early step. projects that are viable can be a stepping stone to eventually bringing in higher value-added investments, a. Commission Tripartite de Mise en Oeuvre de la Loi Hemispheric Opportunity through Partnership Encouragement. as has been demonstrated in countries that overcame similar challenges, such as Colombia and Rwanda. Early successes have a demonstration effect, signaling to other investors that the location has become viable as a place to do business profitably. 1. Focus on competitive subsectors or projects. A country’s competitiveness in attracting FDI will grow 2. Approach the investment process from the investor’s as it rebuilds its business community, public institutions, perspective. international image, and investment promotion capacity 3. Be vigilant against negative environmental and social (see Box 1). “Implementing programs that expand effects of incoming investments. incrementally as the country becomes ready for additional reforms and assistance” is important to long-term success, according to a review of nearly 100 World Bank Group Focus on a few competitive subsectors investment climate projects in FCS between 2003 and or projects 2013 (Masinde and Harwit, forthcoming). In the short term, political and economic circumstances may constrain the number and quality of viable As fragile economies improve, they cease to be considered investment projects. An investment promoter should “FCS.” However, this note is not focused on how to recognize this and quickly focus on more realistic targets: improve the investment climate to move beyond FCS the relatively few subsectors and projects that offer status. Rather, it proposes tactics for attracting FDI in the compelling business opportunities. short term as one way to meet the challenges of rebuilding and economic recovery. World Bank Group experience National development needs, policy goals, and political suggests that, in the short term, the most effective directives often set the priorities for investment form of investment promotion in FCS is highly targeted promotion. However, many sectors prioritized for investor outreach, often complemented by necessary, national or local development will not be internationally sector-specific reforms to the investment climate, and in competitive, and political priorities may not align with some cases, image building. Outreach is the process of economic realities. Politically appointed investment identifying high-potential investors and approaching them promoters with the low capacity and scarce resources directly to make the case for investing in a location. This typical of fragile economies may see little need to explore note presents three guiding principles to this process: other priorities. This is a lost opportunity. 2 Investment Climate In Practice l World Bank Group Practitioners must begin with an assessment of a location’s reconstruction, resource extraction, and infrastructure competitiveness. This involves: development often provide unique opportunities to a small and quickly identified pool of large, capital-rich • Considering a long list of desirable sectors. investors with experience in FCS. • Understanding each sector’s competitive factors, including markets, value chains, production processes, At this point, the mode of investment should be cost drivers, industry players, relevant public policy, considered. Greenfield investments, joint ventures, innovations, and trends. public-private partnerships, mergers, acquisitions, • Assessing whether the business environment would be franchising, and licensing all have different requirements, conducive to promoting investment in key sectors. affecting the competitiveness of priority subsectors and • Scoring the location’s long list of sectors against these projects. The search for prospective investors and the competitive factors, and deciding if it can attract such exact outreach mechanisms used will often depend investments. on the prevalent modes of investment in the targeted • Comparing the most promising sectors against those of sectors. These are usually chosen by the investor, but competing locations. they are sometimes dictated by the existing legislative and policy framework in a country. The promoter should In FCS, this process will often reveal a relatively narrow take investor needs into account as they relate to likely range of attractive subsectors, for example, rice modes of investment. processing or garment assembly (rather than broad sectors, such as agribusiness and manufacturing), and Table 1 shows the sectors and subsectors that attracted even specific viable projects, for example, an opportunity the most FDI interest in FCS over the period 2005–12. The to set up a cold storage facility for dairy products. Major 13 sectors represent 84 percent of all announced projects Table 1. The top 13 sectors in attracting Foreign Investment to fragile and conflict-affected situations, 2005–12 No. of % of Sectors projects total Leading subsectors (no. of projects) Financial services 363 25.0 Retail banking (316), corporate and investment banking (21), insurance (17) Coal, oil, and natural gas 132 9.1 Oil and gas extraction (54), gas stations (14), support activities for mining and energy (14), natural, liquefied, and compressed gas (12) Food and beverages 125 8.6 Food and beverage stores (22), sugar and confectionary products (22), soft drinks and ice (20), crop production (11), breweries and distilleries (9) Metals 121 8.3 Mining of iron ore, gold, silver, copper, nickel, lead, zinc, and other metal ores (68), production and processing of alumina, aluminum, and nonferrous metals (27), steel products (12) Communications 106 7.3 Wireless telecommunications carrier (41), communications equipment (21), radio and television broadcasting (17), wired telecommunications carriers (16) Business services 91 6.3 Advertising, public relations, and related (14), legal services (12), professional, scientific, and technical services (12) Transportation 72 5.0 Freight and distribution services (31), air transportation (12), water transportation (11) Textiles 41 2.8 Clothing and clothing accessories (30) Industrial machinery, 39 2.7 Agriculture, construction, and mining machinery (14), general purpose machinery (9) equipment, and tools Real estate 38 2.6 Real estate services (15), commercial and institutional building construction (10), residential building construction (8) Building and construction 36 2.5 Cement and concrete products (32) materials Alternative and renewable 35 2.4 Hydroelectric power (19) energy Hotels and tourism 28 1.9 Accommodation (19), travel arrangement and reservation services (9) Source: fDi Markets (database), Financial Times (accessed September 29, 2013), http://www.fdimarkets.com. Promoting Foreign Investment in Fragile and Conflict-Affected Situations 3 in FCS. In those eight years, 50 countries and territories A relatively small number of companies from a few were classified as FCS for at least one year. Of these, half countries dominate these projects, given their high-capital, were classified as such for all eight years. Together these high-technology, high-risk characteristics. The majority of 50 countries and territories attracted 1,454 FDI projects extractive projects have come from five countries: Australia, while they were classified as FCS. Even the 25 countries Canada, China, the United Kingdom, and the United States. and territories that were FCS for all eight years attracted an average of 31 announced FDI projects,6 or about one However, outside the extractive and financial sectors every three months. some companies employ strategies to seize new markets, and they have developed business models to effectively For the most part, these projects are well distributed, with manage the associated risks (see Table 2). about half or more of FCS receiving at least one project in each of the top seven sectors. Although only 8 percent of Companies with sales offices in a fragile or recovering projects are engaged in extraction, the capital expenditure state or actively trading with domestic business partners of these projects is much higher than for other business have demonstrated a level of comfort with the risks. They activities, giving them an outsize presence in FDI inflow are good candidates for investor outreach activities, as statistics in FCS. By number of projects, however, the are pre-conflict investors waiting for the right time to majority are in financial and business services (31 percent) re-engage. The most cost-efficient way to generate new and manufacturing (20 percent), which may offer higher flows of FDI may be to encourage established investors to value added and greater supply chain effects, with fewer expand, deepen, or diversify their operations, although environmental and social risks. The next largest activity— this group will be relatively small in most situations. sales, marketing, and support—accounts for 15 percent of Regional investors. This group tends to have better all projects. Projects in these sectors are among the lowest knowledge of the realities on the ground because of value-added, but they represent a common first step for proximity, information, historical connections, personal companies wanting to access and study new markets connections, and cultural understanding or affinity. Investors before investing in production. Perhaps not unsurprisingly, from countries with former colonial relationships often share of the 1,454 projects, only 12 were in research and these characteristics and should be included in this group. development or design, development, and testing, activities highly sought for their higher value-added and Excluding extraction projects, 59 percent of all FDI projects potential for skill transfer. in the analyzed database came from countries with a shared border, a capital within a three-hour flight,7 or Approach the investment process from a past colonial or wartime relationship. This argues for non-extractive investor outreach activities to carefully the investor’s perspective consider regional prospects before looking farther abroad; Focus on investors most likely to invest in FCS for example, post-conflict Kosovo used this approach to attract the manufacture of Bulgarian steel products. Despite the willingness of some to invest in locations recovering from strife or disaster, the relatively high risk Diaspora. Former or displaced citizens may have relatively is clearly not for every investor. An investment promoter’s high wealth, foreign business experience, and a personal outreach should target only the most promising investors, desire to return, or at least to participate as the recovering and thus it is essential to identify investors with the will or economy stabilizes and grows. In 2012, $406 billion in track record of taking such risks. Four main types of investors remittances was sent to developing countries, and by 2015, may have special reasons for investing in these situations this number is projected to exceed half a trillion dollars. and should be given special consideration when investment Remittances are increasingly seen as a resource to be promoters create their prospect lists: FCS-accustomed harnessed for investment. The Liberian Diaspora Fund is an investors, regional investors, diaspora, and investors with example, with remittances from Liberians abroad pooled additional, non-financial motives for investing. and matched to small and midsize enterprises in sectors the investors want to support. The entrepreneurs are provided FCS-accustomed investors. Many such investors look basic business training and ongoing mentoring. for large concessions to extract natural resources or develop major infrastructure, such as deep-sea ports and The beneficiaries of such programs typically operate small hydroelectric dams. Their business growth depends on enterprises, but the organizations that run the programs getting access to untapped resource reserves or filling can offer beneficiaries useful connections to wealthy large infrastructure gaps, opportunities more prevalent citizens abroad and opportunities for collaboration. in the undeveloped markets of FCS. These projects come For example, in a country where most agricultural land with high risks but also high returns. holdings are small, a microfinance program that helps 4 Investment Climate In Practice l World Bank Group Table 2. The 10 companies with the most investment projects in fragile and conflict-affected situations, 2005–12 No. of Source No. of destination countries Company projects Types of activity country (regions) Coca-Cola 12 Beverage manufacturing United States 6 (various regions) Lonrho 9 Food and beverage manufacturing, logistics, United 3 (Sub-Saharan Africa) manufacturing of building and construction materials Kingdom Vimpelcom 8 Information and communication technologies (ICT) Netherlands 3 (Georgia, Sub-Saharan Africa) and Internet infrastructure Bollore Group 7 Logistics France 5 (Iraq, Sub-Saharan Africa) Dak Lak Rubber Co. 6 Manufacturing of rubber hoses and belting Vietnam 1 (Lao PDR) Inditex 6 Clothing retails Spain 3 (Eastern Europe, Central Asia) Move One 6 Distribution and postal services United Arab 2 (Afghanistan, Iraq) Emirates Samsung 6 Servicing consumer electronics, some manufacturing Korea, Rep. 4 (Asia, Sub-Saharan Africa) and retail Shoprite 6 Food and beverage retail South Africa 3 (Sub-Saharan Africa) Viettel 6 ICT and internet infrastructure Vietnam 5 (various regions) Source: fDi Markets (database), Financial Times (accessed September 29, 2013), http://www.fdimarkets.com. farmers upgrade machinery and agricultural practices other stakeholders with influence over approvals, and to could give a large contract farmer the confidence to invest. identify investment climate reforms that may be needed for outreach to succeed. Investors with additional, non-financial motives for investing. This group includes state-owned enterprises, Stakeholders within the government are more likely to sovereign wealth funds—which are increasingly attracted assist in overcoming constraints if they understand the to infrastructure projects—and socially concerned investor’s business objectives, the benefits for the country’s investment funds. These institutions, while still needing to economic recovery, and how collaboration to secure the show economic returns, may have longer time horizons investment serves the government’s interests. This dialogue and be able to accept higher risk and lower returns to also helps the investment promoter better understand the achieve political or social aims. root causes of the constraint and may lead to ideas for solutions. For example, China’s “Go Out” policy encourages competitive Chinese enterprises to invest abroad to create Common deficiencies in the investment climate in strong Chinese multinational corporations, recognition of fragile and conflict-affected situations include missing Chinese brands, and adequate supply of the raw materials or inadequate infrastructure, underdeveloped human that are fueling the country’s long-term growth. In this resources, disrupted distribution channels, difficulty context a Chinese state-owned enterprise, in exchange obtaining inputs, and weak service providers. Some critical for long-term access to critical raw materials, might deficiencies may need to be fixed before investment accept short-term losses that would be unacceptable to promotion becomes viable.8 commercial enterprises. For example, in 2012, a World Bank Group project in Haiti identified a lack of industrial park space as Organize support and fix any “deal-breaking” a major impediment to expansion of the otherwise investment climate issues promising garment sector. The country’s garment Once the competitive subsectors or projects and their sector representatives collaborated with the National likely investors have been identified, investment promoters Industrial Parks Authority to clarify land and property should map out the entire investment process from rights impeding park development; get funding from the the investor’s perspective. This includes steps for due World Bank Group for four factory buildings with 11,400 diligence, fulfilling government requirements, starting square meters of new space; and put together an investor operations, and getting to market. The purpose is two- outreach campaign that led to 2,000 new jobs from new fold: to enlist the support of policymakers, regulators, and or expanded investments by three companies. Promoting Foreign Investment in Fragile and Conflict-Affected Situations 5 Whether using a project-specific approach, as in Haiti, or 4. Surprise the investor with something positive. a broader reform-oriented approach, putting support in Take any opportunity to transform an investor’s place before approaching investors will greatly increase preconceptions about the situation. The challenges of the effectiveness of investor outreach. Investment doing business there may be well known, but positive promotion without this foundation is likely to waste time developments may not be. Good examples include and resources. testimonials from existing investors and concrete demonstrations of public and private sector support Correct overly negative impressions and deal with lined up by the investment promoter as part of the political risk concerns initiative. Promoters in both El Salvador and Colombia used this approach very effectively to grab the Investment promoters in FCS may have to overcome attention of investors. lingering international perceptions of danger and instability, even after their locations have achieved relative Recent global investor surveys indicate that political risk safety and security. In the late 1990s and early 2000s, is a major obstacle to investment in FCS (MIGA 2013, 1). World Bank Group projects in Colombia, El Salvador, An effective investor outreach program needs to consider and Nicaragua helped set up and build the capacity of how to respond when prospective investors raise issues new investment promotion agencies. All three places such as expropriation of assets, breach of government had experienced armed conflicts in recent memory and contracts, and currency convertibility. Articulating steps Colombia was still in conflict; however, crime statistics taken by the government to protect investments will help showed Bogota to be safer than Sao Paulo and Rio demonstrate how the situation is improving. It can also be de Janeiro, while Nicaragua’s capital was the safest in reassuring to outline known private and public providers Central America. The municipal and national investment of political risk insurance and trade guarantees. The promotion agencies in these locations built promotional Multilateral Investment Guarantee Agency of the World messages around these facts and collaborated with Bank Group, which provided guarantees of about $1.1 their national governments on rebranding campaigns to billion in FCS over six years between mid-2006 and mid- target international markets: “El Salvador works” and in 2012, is one of a few insurance providers covering periods Colombia “The only risk is wanting to stay.” In investor beyond 10 years in FCS (IEG 2013, xiii–xxvii). presentations, the agencies took pains to demonstrate their messages were based on credible, objective data and not self-interested hyperbole. Be vigilant against negative environmental and social effects These three examples illustrate clearly that, when pitching A successful investment promotion initiative does not an FCS as a destination for investment, it is important to seek to attract any investment at any cost. It should not establish credibility. The following principles can help: pursue investments which the public will not support 1. Be honest about the situation. Overly rosy pictures and the government does not have the capacity to lead to disappointment and distrust which can kill effectively administer and regulate. The weaker regulatory projects and future chances. Discuss the location’s environment characteristic of FCS may not provide strengths—using facts from respected, objective the necessary safeguards. For example, concession sources9—and weaknesses. Take the opportunity agreements should retain sufficient value for the to present any mitigating factors the investor may country; screen for illegality, such as money-laundering; have missed. and defend against negative environmental and social 2. Take ownership of the investors’ concerns and effects that can aggravate fragility, work against projects’ potential benefits, and turn opinion against FDI generally. present workable options for mitigating risk. Options should include advice on protective laws Investment promoters should not be the ultimate and government guarantees, political risk insurance, guardians against these risks. However, they need to professional security and other services, and housing be aware of environmental and social issues and avoid and transportation for personnel. pursuing problematic investments. 3. Show that the location’s pitch is based on an understanding of the investor’s specific situation. General environmental and social risks include labor abuses; Prepare investor information and promotional resource depletion; environmental degradation; harm to materials for individual target sectors and companies. health, safety, and security; population displacement; loss Such a targeted approach can be much more cost of biodiversity; threats to indigenous peoples; and harm effective, particularly for promoters in often cash- to cultural heritage. In post-conflict situations, investment strapped situations. promoters should pay special attention to any dimensions 6 Investment Climate In Practice l World Bank Group of the conflict which had implications for particular • Be sensitive to controversial issues: The political, sectors, for example control of certain natural resources social, and cultural contexts of the situation may or industries by conflicting sides, and ensure that targeted hinder the types of investment that can be successfully investments would not foster further instability. promoted. In South Sudan, which achieved independence from Sudan after a long, ethnically By controlling for potentially deleterious factors in the charged conflict, the notion of foreign investors selection and implementation of target projects, an using South Sudanese land to enrich themselves was investment promoter can help the overall operational likened by many to a return of the “old guard.” In performance, social acceptance, and long-term 2008, the country’s legislature proposed a bill which, development impact of priority sectors. Projects that do while ostensibly intended to promote investment, not meet these standards should be advised to come into imposed arbitrary and onerous barriers including a compliance. If they do not, they should be dropped. $500,000 fee and inefficient governance mechanisms, Three guidelines can help to set the scope of such as a 54-person committee to review and environmental and social scrutiny to be undertaken by approve all investment projects. Realizing this was investment promoters: counterproductive for national development, the assembly and the administration worked with the • Exercise caution with new investors: Many fragile World Bank Group for four months to strengthen other and post-conflict economies are in the process protections in the bill enough that stakeholders were of rebuilding an industrial base and associated comfortable removing the fee and streamlining the sector-specific legal and regulatory frameworks. approval committee to 12 people. Sectors prioritized for growth may not yet have an environmental and social track record or adequate safeguards in place. Thus, it is important to start early Conclusion in addressing how the government can mitigate these Investors can and do locate projects into situations risks as part of the process of targeting and attracting recovering from conflict or disaster. Many of these investors to a sector. The less established the sector, the projects are well implemented with obvious benefits, greater is the need to ensure adequate safeguards. but some are mishandled, becoming squandered opportunities. A good investment promoter can have a • Understand that adequate governance capacity significant impact—in attracting investors that would not is critical: A government should be able and willing have come otherwise, negotiating good terms for the to perform due diligence in negotiating concessions for extraction and infrastructure, as well as to enforce country, and helping guard against environmental and compliance with regulations meant to protect the social harm. The process helps create jobs and stimulate public interest. For example, a World Bank Group industries that reduce fragility and form a foundation for review of forest concessions in Liberia found that an future growth. aggressive program to attract forestry investment had This investment generation can be achieved by a small been administered with inadequate due diligence. team with a small budget, as long as its efforts are The resulting landscape of unqualified companies and outcome-oriented and focused on directly approaching a government unable to collect millions of dollars in the few investors optimally suited to the situation’s back taxes led to a cancellation of all forest concessions few competitive subsectors and projects. Clear and (IEG 2012, 68–70). This resetting of the situation may comprehensive regulations should be in place for those or may not lead to better protection of the Liberian subsectors, at a minimum, and the investment promotion people, their interests, and the environment; in either team must have the capacity and will to be vigilant case, responsible investors in the future may have doubts about the government’s reliability as a partner against proposed projects that pose unacceptable risks to and hesitate to invest. the environment and society. More fundamentally, a low capacity for governance may A review of recent FDI flows and a decade of World Bank lead to investment regimes that are poorly conceived Group projects in fragile and conflict-affected situations or executed, such as those relying on fiscal and other support the conclusion that investment promoters can incentives, which may not be the most effective way have a meaningful effect, and this evidence suggests that to induce investment and can be particularly costly for recovering economies can tap into the benefits of FDI and recovering economies.10 globalization in spite of their difficult circumstances. Promoting Foreign Investment in Fragile and Conflict-Affected Situations 7 Notes 6. Note that while the average was 31, the median for these countries was only 1. Fragile and conflict-affected situations, or 14. Angola has almost 300 projects FCS, are countries and territories that have and Myanmar almost 100 projects, thus a harmonized average Country Policy and distorting the average. The median of 14 Institutional Assessment (CPIA) rating of 3.2 may therefore be a more accurate picture or less (or no CPIA) and/or have or have had of project volume in a “typical” fragile or a United Nations and/or regional peace- conflict-affected situation. keeping or peace-building mission during 7. A three-hour flight time was approximated the past three years. The 50 countries and by a measurement of distance: 2,500 territories classified as FCS for at least one kilometers between the two countries’ year in the period 2005–12 are Afghanistan, executive capitals. Angola, Bosnia and Herzegovina, Burundi, Cambodia, Cameroon, the Central 8. Areas of reform to improve the investment African Republic, Chad, the Comoros, the climate include investment laws and Democratic Republic of Congo, the Republic policies, aspects of business start-up, tax of Congo, Cote d’Ivoire, Djibouti, Eritrea, The procedures, and trade logistics, among About Investment Gambia, Georgia, Guinea, Guinea-Bissau, others. Climate In Practice Haiti, Iraq, Kiribati, Kosovo, the Lao People’s 9. These may include international rankings, Democratic Republic, Liberia, Libya, the such as those in the World Bank Group’s This note series is published Marshall Islands, Mauritania, the Federated Doing Business report, the World Economic by the Investment Climate States of Micronesia, Myanmar, Nepal, Forum’s Global Competitiveness Index, Department of the World Bank Nigeria, Papua New Guinea, São Tomé Transparency International’s Corruption Group. It discusses practical and Príncipe, Sierra Leone, the Solomon Perceptions Index, and Heritage Foundation’s considerations and approaches Islands, Somalia, South Sudan, Sudan, the Index of Economic Freedom. Syrian Arab Republic, Tajikistan, Timor-Leste, for implementing reforms that 10. For more on the subject of investment Togo, Tonga, Tuvalu, Uzbekistan, Vanuatu, aim to improve the business West Bank and Gaza, Western Sahara, the incentives, see James (2010). environment. The findings and Republic of Yemen, and Zimbabwe. views published are those of 2. Twenty-five countries were classified as the authors and should not be fragile and conflict-affected situations for References attributed to IFC, the World every year in the period 2005–12. According Bank, MIGA or any other to data from the United Nations Conference IEG (Independent Evaluation Group). 2012. affiliated organizations. Nor do on Trade and Development, FDI grew in Liberia Country Program Evaluation: any of the conclusions represent those countries at a compound annual rate 2004–2011. Report. World Bank Group, official policy of the World Bank of 12 percent, compared to 4.5-percent Washington, D.C. growth in the rest of the world’s FDI. or of its Executive Directors or _____. 2013. World Bank Group Assistance the countries they represent. 3. Data from World Bank website at http:// to Low-Income Fragile and Conflict- go.worldbank.org/NVS5ERWAY0 (accessed Affected States. Report. World Bank March 16, 2014). Group, Washington, D.C. About the Investment Climate 4. Data from World Bank website at http:// James, Sebastian. 2010. “Providing Incentives Department of the data.worldbank.org/mdgs/progress-status- for Investment: Advice for Policymakers World Bank Group across-groups-percentage-of-countries in Developing Countries.” Investment (accessed March 16, 2014). The percentage Climate In Practice note no. 7, World The Investment Climate of FCS that had met or made sufficient Bank Group, Washington, D.C. Department of the World Bank progress toward each of the nine Millennium Masinde, Catherine K., and Emily Harwit. Group helps governments Development Goals ranged from 3 percent Forthcoming. Improving the Investment implement reforms to improve (infant mortality) to 45 percent (education Climate in Fragile and Conflict their business environments gender parity). The average was 20 percent. Situations: Lessons from IFC Projects for and encourage and retain 5. Data from fDi Markets (database), Financial Operationalizing the World Development investment, thus fostering Times (accessed September 29, 2013), http:// Report 2011. World Bank Group, competitive markets, growth, www.fdimarkets.com. The authors analyzed Washington, D.C. 1,454 FDI projects registered for all countries and job creation. Funding is MIGA (Multilateral Investment Guarantee designated as FCS by the World Bank provided by the World Bank Agency). 2013. 2012 World Investment Group, in the years they were designated as Group (IFC, the World Bank, and Political Risk. Report. Washington, FCS, between January 2005 and December D.C. and MIGA) and over 15 donor 2013. For example, if a location was partners working through the classified as an FCS for just the one year World Bank Group. 2012. Global Investment multidonor FIAS platform. of 2006, only its 2006 FDI projects were Promotion Best Practices 2012. Report. included in the analysis. Washington, D.C. Investment Climate l World Bank Group World Bank Group