Globalisation has changed the demography of international economy in which there is no room for the outdated and adhesive policies for promoting South-South co-operation.
These developing countries need remodelling of economic policies compatible to international standards for the internationalisation of their firms through outward foreign direct investment (OFDI) in the mutually interested areas.
This was suggested by Tariq Sayeed, a former president of FPCCI, in his presentation at the three-day inter-government experts meeting, which ended on December 7 in Geneva.
The meeting was arranged by United Nations Conference on Trade and Development (Untacd) which included four sessions on enhancing productive capacity of developing countries' firms through internationalisation.
On one of the important topics, 'Strengthening South-South Co-operation through Outward FDI by Developing Country Firms', he threw light on some of the economic facts responsible for bringing change on the economic globe.
He referred to the success stories of some international firm being operated by the private sectors in developing countries and said that the firms of developing countries can be strengthened by entering into Regional Trade Agreements (RTAs) and Free Trade Agreements (FTAs) which are gaining momentum in the ongoing era of globalisation.
Tariq, who is chairman of G77 CCI Trade Fair Authority and a former Chairman of G77 CC&I, also identified some factors, including similarity in economic structure, far-flung distances among the South-South nations, lack of complementarily in trade and economy, the few opportunities in relocation of industries and services, lack of information about each other's potential in terms of consumption, production, trade gap, consumers' behaviour and purchasing power parity and poor contact level at public and private sectors level among the countries which are impeding growth in co-operation among South-South nations.
He pointed out the current change in global trend and said that FDI was concentrated in 'developed' countries, both in source and destination, which is about 60 percent of the global investment of $1.3 trillion. The absolute level of FDI flow to many developing countries had increased in the last decade, and now forms a significant proportion of all FDI, which registered 36 percent with FDI of $233 billion. It is therefore not surprising that South-South investment flows (that is, from one developing country to another) have also intensified. However, the effects of FDI were limited. He suggested developing countries to materialise the available domestic resources in more productive manner instead of depending on FDI from other countries.
He said that the success of the firms depended on adoption of innovation, technology up-gradation and better marketing strategy for the productivity enhancement of the firms irrespective of the nature of co-operation.
He asserted the need for implementation of South-South international investment agreements (IIAs) including 653 bilateral investment agreements (BITs), 312 double taxation treaties (DTTs) and 49 preferential trade and investment agreements (PTIAs) between developing countries to achieve the objective of promoting South-South co-operation through strengthening and enhancing the productivity of the firms of developing countries.
The meeting was also addressed by the prominent scholars, economists and businessmen from various countries like India, Bangladesh, Sri Lanka, Kenya, Tanzania, Tunis, Egypt, Brazil, and Mexico.-PR
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