Summary
At the opening session of the inaugural World Investment Forum (WIF) in Accra, Ghana, a panel of senior executives from some of the world's largest companies were broadly positive about prospects for future flows of foreign direct investment (FDI). In his keynote opening speech, the Secretary-General of UNCTAD, Mr. Supachai Panitchpakdi, expressed cautious optimism for future FDI flows, listing a number of reasons for such optimism while however highlighting the significant risk factors that existed.
A speech by the President of Ghana, John Kufuor, was read out on his behalf by a senior minister. Guests of honour included Ana Vilma Albanez de Escobar, Vice-President of El Salvador, and the President Emeritus of the United Republic of Tanzania, Benjamin Mkapa. The opening ceremony was chaired by Kai Hammerich, the outgoing President of the World Association of Investment Promotion Agencies and co-organizer of the World Investment Forum. Patricia Francis, Executive Director, International Trade Centre, moderated session I of the WIF.
The corporate speakers were Pierre Cailleteau, Managing Director Sovereign Risk and Chief International Economist, Moody's Investor Services; Gary Carroll, Director, General Business, IBM South and Central Africa; Horst Kayser, Chief Strategy Officer, Siemens; TC Venkat Subramaniam, Chairman and Managing Director, Export-Import Bank India; and Joseph Quinlan, Managing Director and Chief Markets Strategist of Bank of America.
One speaker stressed that the profitability of companies headquartered in the developed world was currently being supported by their operations in developing countries at a time when growth was slowing in the rich world. It was suggested that that new and growing source of profitability might well cause companies to accelerate their investments in the South.
It was emphasized by another speaker that the fundamentals driving FDI were strong and the long-term need to expand geographically as compelling as ever. For his company, which was active in a range of sectors, being close to customers and localizing value chains would continue to be a key long-term driver, as it had been since the company's founding in the first wave of globalization in the mid-nineteenth century.
FDI was also discussed from a South perspective, it being noted that rising global firms from the developing world had different strategies for different geographies. South-South FDI tended to be in the form of greenfield investment, while South-North FDI overwhelmingly involved acquisitions.
High on the agenda for speakers and conference delegates was the current credit crisis, ongoing since August 2007. The consensus was that the worst of the credit crisis might have passed, even if its negative spillover effects on the real economy, particularly in the US, would continue.
Those numerous reasons for optimism about the future of FDI flows were tempered by some significant risks. The threat of protectionism was the most frequently cited concern, largely because the developed world was not yet accustomed to the rise of the South.
Support for FDI in the developing world was at risk if the benefits of globalization in general and FDI in particular were not shared more widely by populations. The need for greater human resources upskilling was also stressed as being good for companies' profitability and good for countries' development. The latter would mitigate the risk of a backlash against FDI in poor countries. Other risks to continued high levels of global FDI included inflation and macroeconomic imbalances.