AIM 2018 Overview
International trade and foreign direct investment (FDI) was long dominated by companies and investors from developed markets, mainly European, American and Japanese operators. Their target was mainly developed markets and to a lesser extent developing countries, then often with the purpose of low-cost sourcing. Starting with China in the 1990s, developed market operators discovered that FDI was not only an option but a necessary complement to exports. In a short period of time, a multitude of new markets emerged – notably in the Middle East –, many requiring intensive market cultivation and presence. As a result, FDI in emerging markets grew rapidly, not least in manufacturing operations, but also in a host of services sectors such as transports and communications. In 2016, emerging markets received 40 percent of global FDI.
The last decade has seen a large number of rapidly expanding, multinational companies originating from emerging markets. On Fortune’s Global 500 list, based on revenues, some 30 percent of companies originate from the developing world. Many of these companies are now establishing a global presence, including through FDI in developed countries. A number of recent high-profile acquisitions in Europe and the US have involved operators from emerging markets. In 2016, emerging markets operators accounted for nearly 30 percent of global FDI.
In parallel, political attention given to challenges with global ramifications such as climate change, environmental degradation and the shrinking supply of clean water and air has intensified. There is a broad consensus view that solutions to these problems need both political and corporate involvement. The diffusion of technology, innovations, awareness and skills is key to successfully overcome global threats and challenges. Here, FDI linking developed and emerging markets may have a leading role.
2018 Conference Topics
Day One – 9 April 2018
Global Leaders Debate
Seen as an engine of economic growth, FDI is considered to contribute to the increase of domestic capital, job creation and raising incomes while promoting technology and skill transfer. As countries continue to compete to attract foreign direct investment, it is evident that the effects FDI can have on a host country are advantageous. However, the spillovers can also have less desired consequences, including increased inequality, unfair competition between foreign and domestic companies as well as other negative environmental outcomes.
The Global Leader’s Debate will explore how foreign direct investment can be used as a vehicle to drive sustainable development. The limelight session will uncover the ways in which governments can promote FDI linkages between developed countries and emerging markets, with a view of bolstering sustainable development, ensuring equality of opportunity, and an unbiased regulatory landscape.
The high-level panel will convene Heads of State, Academia, Heads of International Institutions and Investors from Developing and Mature Economies.
A New Wave of Economic Opportunity & Digital Innovation: The Understanding the Promise of Blockchain
The Dubai Blockchain Strategy was launched October 2016 by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, establishing a roadmap for the introduction of Blockchain Technology for Dubai and the creation of an open platform to share the technology with other cities across the globe.
In line with the UNSDG’s, Blockchain technology adoption could contribute to the savings of up to 114 MTons of Co2 emissions as well as redirect up to 25 million hours of economic productivity annually. The strategy is expected to introduce a robust system for enabling the creation of new businesses utilizing the technology.
The session will examine Blockchain technology and its promise to contribute to economic productivity, transparency and environmental responsibility, while exploring the opportunities its implementation will hold for private and public sector in Dubai, focusing on key industries such as banking and fin-tech, energy, healthcare, e-commerce, transportation, smart-cities and tourism.
Creating Value Through Technology and FDI
As policymakers begin to implement frameworks and policies effective in attracting responsible FDI inflows with a goal to foster inclusive and sustainable societies, it is important to look at the industries and areas where FDI can be expected to provide the most value in view of sustainable development, in emerging markets.
Day Two – 10 April 2018
How to Compete for Investment in Industry 4.0
Developing countries often compete for investment that involves lower levels of technology and value add that investors would locate in their home countries or in other developed countries. This session will explore how governments can capture more sophisticated investment with a higher technology content. Examples of successful case studies that can be discussed include Dubai, the Czech Republic, Malaysia, Thailand and Brazil, all of whom have been able to successfully attract advanced investment after initially competing on the basis of low costs.
The Evolution of FDI: How Technology is changing the Future of Productivity and Growth
A key driver for advanced investment is the availability of a workforce with the specific skills that match investor requirements now and into the future. With labor market disruption being a growing trend in the global workforce and economy, there is an urgent need for adult skilling, reskilling and up-skilling.
This session will explore how multi-stakeholder collaboration and investment can optimize the potential of the adult workforce. It will identify how emerging market governments can better understand and anticipate investor needs, creating the types of skills that investors require. Conversely, it will analyze the role that foreign investors play in developing their local workforce and how they help to advance the skill base of the countries in which they operate.
Public-Private-Partnerships (PPP) Partnerships for Public Infrastructure Development
Public-private partnership is a tool increasingly used by governments to shore up private investment for building and managing public infrastructure, such as railroads, motorways, bridges and tunnels, utilities such as power generation stations, and schools and hospitals. It is a long-term contract (usually 25-50 years) between the government and, typically, a consortium of private investors and construction firms, which receive payment by user fees such as tolls or availability payments from the government over the contract period.
PPPs have received a lot of attention lately for claimed successes as well as claimed failures. They have gained traction for being cost-effective and allowing for rapid construction of needed infrastructure, particularly motorways. But the alleged superiority of PPPs is also disputed on a number of counts: for example, some governments may borrow money for infrastructure projects more cheaply than private investors. And by being extremely complex, PPPs require a whole array of competencies in procurement, negotiation, financing and governance by the partners involved.
This session will examine the scope for PPPs with foreign investors – which in most cases originate from developed countries - as a means for emerging economies to build and manage their public infrastructure.
Incentives Policies for the Benefit of Nations
Incentives policies to attract FDI for decades have been based on the simple notion that FDI is good and that the more investment a company makes and the more jobs they create the better the investment and the more incentives they should get.
Across Europe, North America and OECD countries incentive policies have been based on a simplistic formula around the size of capital investment and job creation nuanced by where the investment locates (“regional policy”) and the sector of the investment (“industrial policy”).
In developing countries, incentives policies have been further simplified, being based on the establishment of Free Zones where any company that invests in the Zone avails of the tax and customs incentives with very limited criteria for which companies can invest.
Incentives policies are under fire. The World Bank and major professional services companies have found that incentives often make minimal difference to where companies invest. IncentivesMonitor.com has tracked nearly $200 billion of incentives for specific inward investment projects with the average incentive over $40,000 per job created and in many cases 30-40% of capital investment is given back to the company in the form of an incentive. The lost tax revenue from Free Zones is unknown but runs into $100 billions. Incentives policies around the world are geared up to attract footloose multinational enterprise not necessarily to support SMEs.
This panel will explore whether or not Sustainable Development has the answers to how incentives policies can change. The expert panelists will discuss the different concepts of Sustainable Development and if and how they can be incorporated into incentives and free zone policies.
The panelists will discuss how incentives can be used to ensure they do actually make a difference and maximise benefits for the country - not just the company.
Day Three – 11 April 2018
Invest In: A Series of Discussions on Regional Investments
The world is changing at an accelerated pace due to a myriad to developments such as technological progress, (geo) political developments and climate change. Change brings with it uncertainty and risks, which influence investment decisions.
Government needs to address both change and investor sentiment via policy decisions and legal frameworks. It is the duty of government to create an ecosystem that allows both society and the economy to thrive.
A clear understanding of domestic and international risks is as pivotal for government to make wise decisions as it is for investors to choose the right projects. For government the policy choices are manifold from protectionist policies to a free trade ideology. Money talks; therefore, investors have the freedom of choice as to where they want to place their investments.
This leaves us with the question of how prepared the various regions are to deal with these issues.
“Regional Focus” will analyze a region’s economic landscape, dissecting the risks, challenges and opportunities of the nations making up the region. The session will assess the economic landscape of national economies and its resulting impact on the regional economic ecosystem, while identifying areas and industries where economic growth can be expected.
The forum will convene key policy-makers, institutional and non-institutional investors, as well as heads of international institutions, political economists and key experts. They will debate and predict challenges and opportunities.
Invest In: Latin America and the Caribbean
According the World Bank, Latin America is likely to be one of the regions most affected by climate change. Its impact already impact is highly visible across the region today. The ‘Latin America and the Caribbean 2030: Future Scenarios’ report by the Atlantic Council and the Inter-American Development Bank raises the possibility that the glaciers of the Peruvian and Bolivian Andes below 5,000 meters will disappear entirely in the coming decades. Such a development would severely disrupt water supplies and ultimately affect the livelihoods of millions of people, who rely heavily on agriculture and hydroelectricity.
Realising these threats, the leaders of Latin America are committed to develop their renewable energy sectors. They are collaborating in many areas such as forest protection and bio-diverse ocean and water protection, in order to create an environment, which is conducive to sustainable agriculture and renewable energy development.
Latin America is spearheading the green energy revolution with renewables accounting for 53% of its total capacity in electricity generation. According to an International Energy Agency (IEA) report, renewables will remain the fastest growing source of electricity in the world. New technologies and economies of scale have led to drastic reductions in the cost of renewable energy sources, providing an incentive for investment in this sector. To that end, countries within the region are working to create favourable business environments to attract foreign direct investment.
Regional efforts and determination to combat climate change will not suffice to tackle a problem with global dimensions.
Though the region’s leaders have joined together to reaffirm their commitment, taking strong measures to increase clean energy development in their countries and to promote sustainable agriculture, the onus remains on world leaders to come up with comprehensive action plans spanning the globe.
Representatives of governments and international organisations, investors and analysts will assess and debate the effects of climate change in Latin America. They will discuss policies pertaining to renewable energy and sustainable agriculture on a country as well as a regional level; and how they can be developed to attract investment in these sectors.
Invest In: Asia Pacific
The Asia Pacific region is a major contributor to exports, innovation and productivity growth. China and certain ASEAN nations have become key hubs for the global manufacturing base.
In 2010 China advanced to become the second largest economy in the world -- precisely due to its strong position as a low cost manufacturing hub. Today, China is quickly moving into medium to high-tech manufacturing, as its labor costs have significantly increased. With an 80% rise in yearly average manufacturing wages since 2010, manufacturing goods in China has become only 4% cheaper than in the United States. As a result China’s technological advancements provides other Asian nations with an opportunity to move into low-cost manufacturing.The ability to attract low-cost manufacturing, however, is dependent on various factors, such as low labor costs, a reasonably skilled workforce and supportive industrial policies. A country’s ability to provide access to preferably clean and renewable energy at competitive costs is also an important part of the framework conditions.
The demand for energy will increase with growing populations. Governments must therefore focus on sound and favorable energy policies, in order to attract to attract in business and the energy sector.
The session will engage representatives of governments and international organisations, investors and analysts to explore the framework conditions to grow industry and employment in Asia on an environmentally and socially sustainable basis. The session will identify the economic opportunity of various Asian economies, with a key focus on the development of manufacturing and renewable energy. Taking a close look at China, the session will also explore its transition into medium to high-tech manufacturing and the lessons to be learned for other Asian economies.
Invest In: Africa
Africa’s population is projected to quadruple to 4 billion by 2100, driving the global population past 11 billion. This constitutes both a risk and an opportunity:
The continents economies need to create the jobs to accommodate the youth bulge in an economically, environmentally and socially sustainable way.
Climate change affects weather patterns, agriculture and human lives globally and in Africa. Africa lacks energy infrastructure, which gives policymakers the opportunity to design new systems availing of the latest developments in clean energy. Transport systems and sustainable building standards can be rolled out on a national, sub regional and regional level.
Renewable energy is of interest. Solar and wind energy as well as geothermal sources of energy or tidal energy can be rolled out on a blank canvas. These advances will allow to lift millions of people from energy poverty into a more affluent future.
A future with access to energy for all will allow industry, agriculture and society to thrive. Ultimately and with technological progress the continent may even be able to export electricity to other regions.
Up to now investors considered Africa a risky place for large-scale projects due to the lack of sufficient infrastructure, a slim pool of a highly skilled workforce and regulatory uncertainty.
Therefore it is pivotal for the continent’s leaders to deliberate and decide on the way forward as far as energy, infrastructure and human resources development are concerned.
Regional Focus: Africa will explore the opportunities and challenges of Africa’s quest for the development of the continent and its (energy) infrastructure. The session will look at the impact of climate change on the continent, the ways in which it can overcome those consequences. The development of Africa’s clean energy infrastructure will have a big impact on the region and beyond.
The session will engage key investors, governments and international institutions to discuss how to best prepare the continent for these developments. It will explore the current global political and economic landscape and identify Africa’s vulnerabilities and strengths in the light of global events.