A view on UNCTAD's World Investment Report 2014

By: Veronica Velásquez Zuluaga* vvelasq5@eafit.edu.co

Law student at Universidad EAFIT, Colombia

According to the UNCTAD, the foreign direct investment (FDI) has increased all types of economic groups, developed, developing and transition. One of the points of the agenda of the countries is to create or elaborate policies to attract investment in their own country regardless of their economic group.

Recently, an investment promotion agency mentioned that the main objective of investment incentives is job creation, followed by technology transfer and export promotion. To achieve this objective, it has to take into account four key challenges: The first one is leadership, this key propose setting guiding principles ensuring policy coherence; the second is mobilization and propose to reorient markets towards investment in SDGs; the third is channeling and pose the promoting and facilitating investment into SDGs sector; and the last one is impact and express the maximization of the development benefits and minimizing risks.

There is an important aspect and is related to the investment of the private sector in all countries. The private sector cannot supplant the big public sector push needed to move investment in the SDGs in the right direction. But an associated big push in private investment can build on the complementarity and potential synergies in the two sectors to accelerate the pace in realizing the SDGs and meeting crucial targets. Private sector contributions often depend on facilitating investments by the public sector. In some sectors such as food security, health or energy sustainability, publicly supported research and technological development (R&D) investments are needed as a prelude to large-scale SDG-related investments.

SDG investment has some approach: the first is economic infrastructure in developing countries, included power, transport, telecommunications and water and sanitation, we can say private sector has a good participation in these topics; another approach is food security and the corporate sector contribution in the agricultural sector as a whole is already high at 75 per cent in developing countries, and is likely to be higher in the future; the third one is Social infrastructure is related to education and health, is a prerequisite for effective sustainable development, and therefore an important component of the SDGs; and the last one is environmental sustainability, including stewardship of global commons, the investment gap is largely captured through estimates for climate change, especially mitigation, and under ecosystems/biodiversity (including forests, oceans, etc.).

We can say private sector intervenes so much in the economy and all their movements can change other sectors such as economy, environment, infrastructure, transport etc.

Reference

UNCTAD (2014) World Investment Report 2014. Available online at: http://unctad.org/en/PublicationsLibrary/wir2014_en.pdf

The Regional Innovation Paradox: the case of Colombia

Opinion article by: Carolina Herrera Cano* (caroherca@gmail.com )

International Business student at Universidad EAFIT, Colombia

The identification of strong sectors in nowadays economy seems to be one of the most effective strategies for the actual creation of a competitive advantage in the international economy panorama. In this context, the innovation has become a goal by itself, and governments are investing in the acceleration of the time response to new demands. During this week it was inaugurated the biggest science and technology district in Colombia: Medellin Innovation, a place where national and international technology and research enterprises will be based. This place was created by Ruta N, the business and innovation center created by Alcaldía de Medellín, EPM, and UNE (Rojas T., 2013).

These kinds of public initiates are created to diminish the levels of inequality, and to guarantee the access to new technologies to a higher percentage of the society. In this sense, public administration is increasingly aware of social capital improvement and its insertion (as a production factor) to the international markets. But these efforts are probably not enough for the actual necessities the nation has, as Prof. Juan Carlos López (Director of the Study Group in Business History) argues, in Colombia the processes needed to actually take advantage from innovation were not well developed, as a example: the agriculture sector was not good enough to guarantee the later process of industrialization.

At this point it is useful to analyze the situation that Christine Oughton, Mikel Landabaso, and Kevin Morgan present in The Regional Innovation Paradox. These authors refer to inequality in terms of innovation policy and industrial policy, especially in developing countries, where they find a contradiction: “between the comparatively greater need to spend on innovation… …and their relative lower capacity to absorb public funds” (Oughton, Landabaso & Morgan, 2002: 98). The lack of coordination between industrial and technological investment, and an appropriate agricultural policy is a good example of this paradox in Colombia. The government must be aware about how society actually receives these incentives, and how they generate value in a sustainable and inclusive way.

The purpose of this analysis is not to only criticize how innovation policies are been undertaken, but to highlight the need to coordinate industrial policies with the real processes in which the Colombian society is. Of course, nowadays countries are looking for better positions in innovation and competitive rankings around the world, but the Colombian government cannot pretend to reach the same goals by the same means. Economic, historical, and social background need to be well understood when designing the national strategies. Public initiatives like the establishment of a science and technology district must promote both the access to new technologies, and its absorption by the civil society.

References

Rojas. T, J. F. (2013). “Medellín Innovation” se llamará distrito tecnológico. El Colombiano, Available in: http://www.elcolombiano.com/BancoConocimiento/M/medellin_innovation_se_llamara_distrito_tecnologico/medellin_innovation_se_llamara_distrito_tecnologico.asp. (September 12, 2013).

 Oughton, C. , Landabaso, M. & Morgan, K. (2002). The Regional Innovation Paradox: Innovation Policy and Industrial Policy. The Journal of Technology Transfer. Vol. 27(1), pp. 97-110.

Taking the human factor into account when designing development policies

Opinion article by: David Ricardo Murcia * (dmurcias@gmail.com)

Political Sciences student, Universidad EAFIT, Colombia

There is one thing that is usually forgotten when someone design a complex system to give a population the key to development, especially when those designs are made by a mostly economic perspective. For instance, assuming that the individuals are rational and that they are circumscribed to an institutional frame were actors –collective or not- are constrained to certain rules, which determine the actions that could be done, it would be  naive statement.

This column is not pretending that the economic perspective lacks on value to the development thought, but it, by itself is not enough. There they left the sociological and political structure of the peoples they’re willing to help without attention, and that course they attempt to failure.

Let me explain myself with a real example. Professors Oughton, Landabaso and Morgan make a significantly contribution to the institutional thought of development in their joint paper The RegionalInnovation Paradox (2002). There they sustain that for acquiring a greater impact in helping people develop there should be more governmental support to programs “promoting inter-organizational learning, improving existing regional innovation capacity and exploiting possibilities for investment and innovation activity”, going further the mainstream programs that rely on the increase of external inversions, and the isolated attempts of the public sector and universities to give the region an opportunity of growth (Oughton, Landabasoand Morgan, 2002).

That’s quite a point. If the state promotes ways in which regions actually learn how to innovate in coordination with universities and, the private and public sector, there for sure are the creation of a functional program for development. But, what the authors of the paper left behind are the social-political character of the regions they study. All are place in the EU: the most highly develop regional political institution, which have the capacity to intervene in its on jurisdiction with little resistance of the folk. That would give the paper and its conclusions reduce space of validity for a global application.

It is not, that what is done by de European Union in Europe could be done in other region. For example, the UNASUR has got low power to help intra-state region develop, and even if it has a way to actually intervene, the people of South America wouldn’t react so softly due to their political customs and social constitution. There, in Europe, the people have gain used to obey the institutional actors: organizations with little link to the person. But here, we are used to see people as the power and the closer the person in power is, the more obedient the folk are. In these sense, if national leaders as presidents are incapable of gaining the control of its entire legal jurisdiction, something as far as UNASUR couldn’t be more irrelevant in order to organize, or even help society.

As a short coming conclusion the institutional agreement proposed by Oughton, Landabasoand Morgan (2002) could only be applicable to Europe due to the sociological political structure of the region and can’t easily be transported to other global regions, just as one would think, they pretended. Each region requires a deep study of the social and political structure before proposing a development scheme. It would be premature to said so, but South America needs the state to stop pretending a transliteration of external programs and start figuring out how to use the human factor that actually exists. 

Reference:

Oughton, Christine; Landabaso, Mikel & Morgan, Kevin (2002). The Regional Innovation Paradox: Innovation Policy and Industrial Policy. The Journal of Technology Transfer. Vol. 27(1), pp. 97-110.