A report of the UN Secretary-General finds that international trade has decelerated markedly in recent years, which could have long-lasting implications on the delivery of the Sustainable Development Goals (SDGs).
The least developed countries (LDCs) are not on track to meet the target of doubling their share of world trade, as set out under the Istanbul Programme of Action (IPoA) and the SDGs.
October 2016: A report of the UN Secretary-General finds that international trade has decelerated markedly in recent years, and that this could have long-lasting implications on the delivery of the Sustainable Development Goals (SDGs). It underlines that the least developed countries (LDCs) are not on track to meet the target of doubling their share of world trade, as set out under the Istanbul Programme of Action (IPoA) and the SDGs.
The Secretary-General’s report, titled ‘International trade and development’ (A/71/275), builds on the conclusions of the quadrennial meeting and 14th session of the UN Conference on Trade and Development (UNCTAD), which convened from 17-22 July 2016, in Nairobi, Kenya. The meeting forged a global consensus, the report recalls, on major action lines that are necessary to capitalize on trade’s role in SDG implementation: building productive capacities to transform economies; supporting more effective state interventions for increasing the efficiency of markets; tackling vulnerabilities and building resilience; and strengthening multilateralism in order to find common solutions.
The expected exit of the UK from the EU is casting uncertainty over the regional and global economic outlook, as the UK accounts for 16% of the EU’s gross domestic product (GDP).
The report was presented to the UN Member States during a debate of the UN General Assembly’s (UNGA) Second Committee (Economic and Financial), on 21 October 2016. According to the report, in 2015, world merchandise trade volume expanded at a very modest pace of 1.5%, the slowest since the global crisis of 2008-2009. The report notes that the expected exit of the UK from the EU is casting uncertainty over the regional and global economic outlook, as the UK accounts for 16% of the EU’s gross domestic product (GDP). This complicates the need for Western Europe and other developed economies to provide renewed impetus, in the coming years, to world trade. The document highlights the need for two transformative shifts, namely the potential of global value chains and the increased significance of services economy and trade, particularly in the digital economy.
Ahead of its 14th session, UNCTAD released the World Investment Report 2016, subtitled ‘Investor Nationality – Policy Challenges.’ It notes that in 2015, global flows of foreign direct investment (FDI) rose by about 40% to US$1.8 trillion, marking the highest level since the global economic and financial crisis of 2008-2009. However, this growth did not translate into an equivalent expansion in productive capacity in all countries, the report finds.
The report reveals that the region of “developing Asia” continues to receive the largest amount of foreign direct investment (FDI), while flows declined by 38% to countries transitioning to a market economy in South-East Europe and the Commonwealth of Independent States. While flows to the least developed countries (LDCs) increased by one third to US$35 billion, FDI flows to Africa fell by 7%, to landlocked developing countries (LLDCs) by 18%, and to small island developing States (SIDS) by 32%.
The investment report also provides insights on the ownership structures of multinational enterprises (MNEs), and maps the global network of corporate entities, using data on millions of parents and affiliates, to propose a new framework for handling ownership issues. The mapping finds that the top 100 MNEs in the UNCTAD Transnationality Index have on average: more than 500 affiliates each, across more than 50 countries, with multiple hierarchical levels across up to six borders; about 20 holding companies owning affiliates across multiple jurisdictions; and almost 70 entities in offshore investment hubs. The implication for policymakers, the text notes, is that ownership-based investment policies will have to be rethought to safeguard the effectiveness of ownership rules.
Among other key messages, the report notes that: FDI flows are expected to decline by 10-15% in 2016; most new investment policy measures continue to be geared towards investment liberalization and promotion; and national security considerations are an increasingly important factor in investment policies. [International Trade and Development] [World Investment Report 2016] [Investment Report Webpage] [SDG Knowledge Hub story on Second Committee Debate]