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    4. Investment policy effectiveness
    Stephen Young [ University of Glasgow ] Posted on 14 June 2012, at 1:02 PM

    Using the IPFSD. The IPFSD aims to serve as a reference work for policymakers in designing national investment policies and in negotiating or revising international investment agreements. Because of its efforts to be comprehensive (and perhaps also because of the range of inputs from within and outwith UNCTAD which have gone into its preparation), the IPFSD is quite dense and not always so easy to read. To facilitate its usage, it may need to be simplified in terms of drafting with fuller explanation, perhaps with the publication of an allied ‘Policy-makers’ guide to the IPFSD’. This would be a valuable and perhaps essential complement to the present Investment Policy Framework for Sustainable Development.

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    Stephen Young [ University of Glasgow ] Posted on 14 June 2012, at 1:20 PM

    4.1 Public governance and institutions. 4.1.1 Isn’t a service orientation towards investors always warranted? 4.1.3 Rather than ‘denouncing corrupt practices’ shouldn’t there be reference to prosecutions (and their implementation)?
    4.3 Measuring investment policy effectiveness. There should be other types of measures too some of which would relate to the performance of the Investment Promotion Agency (marketing measures); and other attitudinal measures such as red tape barriers etc. (which can be derived, for example, from the scorecards produced by international organizations).

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    • 4.1 Public governance and institutions
      • 4.1.1 From framework to implementation
        In the implementation of investment policies Governments should strive to achieve: (1) integrity and impartiality across Government and independence in regulatory institutions, subject to clear reporting lines and accountability to elected officials; (2) transparency and predictability for investors; (3) a service-orientation towards investors, where warranted.
      • 4.1.2 Inter-agency cooperation
        Close cooperation and formal communication channels should be in place between institutions and agencies dealing with investors. The IPA should play a coordinating role given its comprehensive perspective on issues confronting investors.
      • 4.1.3 Anti-corruption efforts
        Governments should adopt effective anti-corruption legislation and fight corruption with appropriate administrative, institutional and judicial means, for which international best practices should serve as guidance. Investors should be held to adhere to good corporate governance principles, which include refraining from paying bribes and denouncing corrupt practices.
    • 4.2 Dynamic policy development
      • 4.2.1
        Policy design and implementation is a continuous process of fine-tuning and adaptation to changing needs and circumstances. Periodic review (every 3-4 years) of performance against objectives should take place, with a view to: - verifying continued coherence of investment policy with overall development strategy - assessing investment policy effectiveness against objectives through a focused set of indicators - identifying and addressing underlying causes of underperformance - evaluating “return on investment” of the more costly investment policy measures (e.g. incentives).
    • 4.3 Measuring investment policy effectiveness
      • 4.3.1
        Objectives for investment policy should be the yard stick for measurement of policy effectiveness. (Where countries have a formal investment strategy it should set out such objectives, see 1.1 above.) They should break down objectives for investment attraction and development impact, and set clear priorities. Performance (especially in terms of investment attraction) should be benchmarked against peers.
      • 4.3.2
        Indicators for objectives related to the attraction of investment may include: - investment inflows (total, by industry, activity,…), - investment flows as a share of gross output and capital formation (idem), - greenfield investment as a share of total investment, - positioning on UNCTAD's "investment potential/performance matrix".
      • 4.3.3
        Indicators for objectives related to the impact of investment may include: - value added of investment activity, - value of capital formation, - export generation, - contribution to the creation of formal business entities, - fiscal revenues, - employment generation and wage contribution, - technology and skills contribution (e.g. as measured through the skill-types of jobs created), - social and environmental measures, - positioning on UNCTAD's "investment contribution matrix".