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Reducing Risks in Developing Countries is Key to Spur Investment and Growth

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A stable business environment, effective regulations, and political stability are among the key drivers of foreign direct investment (FDI) into developing countries, according to a new survey released today by the World Bank Group.

The survey of 750 executives of multinational corporations is part of the Global Investment Competitiveness Report 2017–2018, the first of a biennial series exploring the drivers of investment competitiveness in developing countries. The report finds that international investors prioritize political stability, security, macroeconomic conditions, and conducive regulatory environment when deciding where to make investments that can spur growth and create jobs.

“A business-friendly legal and regulatory environment—along with political stability, security, and macroeconomic conditions—are key factors for multinational companies making investment decisions in developing countries,” said Anabel Gonzalez, Senior Director of the World Bank Group’s Trade & Competitiveness Global Practice. “Combining a survey of global investors with analysis of investment policy issues makes this report a powerful contribution to our understanding of how developing countries—including fragile states—can de-risk their economies and unlock FDI.”

The report explores how FDI creates growth opportunities for local firms, assesses the power of tax holidays and other fiscal incentives to attract FDI, analyzes characteristics of FDI originating in developing countries, and examines the experience of foreign investors in countries affected by conflict and fragility. Combining first-hand investor perspectives with extensive research and data analysis, the report highlights the importance of a conducive and low-risk investment climate for multinational as well as local companies. It recommends specific reforms that can help countries attract foreign investment and maximize its benefits for development.

“The Global Investment Competitiveness Report goes beyond an examination of broad trends in foreign investment. It explores key drivers of FDI in depth,” said IFC Chief Economist Ted H. Chu. “It also offers practical and actionable recommendations to help developing countries ensure they get the most out of international investment.”

The report was launched on October 25th at the Investment Competitiveness Forum. The Forum brought together corporate executives, donor partners, and academics, and senior policymakers of developing countries that have implemented significant investment policy reforms. The effort to increase FDI flows into developing countries reflects the importance of the private sector in meeting global development goals. The scale of private sector activity far surpasses public development funding worldwide, the report notes, and some of the most promising investment opportunities are centered in developing countries.

The report is produced jointly by the World Bank Group’s International Finance Corporation (IFC) and Trade and Competitiveness Global Practice.

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Development

Iraq and the World Bank to Boost Iraqi Women’s Economic Empowerment

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photo: © UNICEF/Wathiq Khuzaie

A new plan to remove constraints and create more economic opportunities for women was launched today by the government of Iraq, with support from the World Bank Group.

The Women’s Economic Empowerment Plan for 2021-2022 outlines the government’s priorities in line with its reform program. The plan follows extensive consultations with key stakeholders and is supported by the Iraqi Ministry of Planning, the Women’s Empowerment Directorate in the General Secretariat of the Council of Ministers, and the High Council for Women’s Affairs in Kurdistan Region of Iraq.

The World Bank Group provided technical support and advice to the government to develop the plan. Key pillars include building capacity for a more gender responsive budget, developing women’s skills in the digital and agriculture sectors; boosting access to finance for women; increasing data related to women in the private and informal sectors; implementing legislative reforms to reduce gender gaps; and strengthening knowledge and capacity around access to childcare.

The plan also includes a special focus on supporting vulnerable groups of women and targeting internally displaced women and returnees to areas liberated from ISIS.

On the launch of the plan, Dr. Yussra Kareem, National Coordinator of the MGF in Iraq and Director General for Women’s Empowerment Directorate at the General Secretariat of the Council of Ministers, said: “Women’s economic empowerment is one of the most important pillars focused on by the general policy for women’s empowerment, and it comes in the context of women’s rights to equality and social justice, and the 2030 sustainable development plan. In light of this, the Advisory Committee for Women’s Economic Empowerment, in cooperation with the World Bank, developed the National Action Plan for 2021-2022 for women’s economic empowerment and identified its six priorities.”

“Iraqi women have proved to be strong and resilient throughout decades of economic and security challenges. Increasing the participation of Iraqi women in the policy-making process and in leading roles is key to promote peacebuilding and social development.” said Saroj Kumar Jha, the World Bank’s Mashreq Regional Director. “The World Bank Group stands ready to support Iraq in strengthening the enabling environment for women’s economic participation and improving women’s access to economic opportunities.”

More women in the Iraqi workforce means more growth and less poverty. IFC is working with the private sector to help remove barriers that hold women back from joining the workforce,” said Abdullah Jefri, IFC’s Manager for the Levant.

Building a resilient economic recovery and ensuring inclusive long-term growth requires the full and equal participation of women in the economy. Canada continues to support Iraq in their efforts to strengthen women’s economic empowerment and welcomes the launch of this workplan under the Mashreq Gender Facility to help address the barriers to women’s participation in the labour force and enhance their opportunities to succeed,” said H.E Ulric Shannon, Ambassador of Canada to Iraq.

Sustainable development in any country cannot be achieved if women are not included in economic life and in political decision-making bodies. To ensure women participation in the labour market is smart economics, and this requires active and tireless efforts over time. The launch of the Woman Economic Empowerment Workplan 2021-2022 today is a step in the right direction, and Norway is proud to support the Mashreq Gender Facility in these vital efforts,” said H.E Erik Burger Husem, Chargè d’affaires at the Norwegian Embassy in Iraq.

The new plan will be implemented with support from national and international civil society organizations, and the private sector, in close coordination with the World Bank Group and international development partners.

The plan is a joint effort between the government of Iraq and the World Bank Group under the Mashreq Gender Facility (MGF), launched in January 2019 by the World Bank Group with  financial support from the governments of Canada and Norway. The facility provides technical support to Iraq, Lebanon and Jordan to boost women’s economic participation and drive inclusive growth. Under the MGF, Iraq set the target of increasing female labor force participation of 5 percentage point by 2024.

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Finance

More efforts needed to boost trust in AI in the financial sector

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Governments, financial regulators and firms should step up their efforts to work together to address the challenges of developing and deploying trustworthy artificial intelligence (AI) in the financial sector, according to a new OECD report.

The OECD Business and Finance Outlook 2021 says that investment in AI finance is on the rise. The financial and insurance sector has consistently been within the top 10 industries in terms of the amount of VC investments in AI start-ups, investing over USD 4 billion worldwide in 2020. Almost 65% of VC investments in the sector went to American AI start-ups.

As AI applications become increasingly integrated into business and finance, the use of trustworthy AI will become increasingly important for ensuring trustworthy financial markets, says the report.

AI has the potential to facilitate transactions, enhance market efficiency, reinforce financial stability, promote greater financial inclusion and improve customer experience. But AI also raises unique challenges to privacy, autonomy, transparency and accountability, which are particularly complex in the financial sector, according to the Outlook.

Critically, increasingly complex AI algorithms that are difficult, or even impossible, to explain could amplify existing risks in financial markets or give rise to new risks.

Transparency, fairness, data governance and accountability are key to managing risk as determinants of trustworthy AI. Failing to foster these qualities in AI systems could lead to the introduction of biases generating discriminatory and unfair results, market convergence and herding behaviour or the concentration of markets by dominant players, which can all undermine market integrity and stability.  

Existing financial regulations may fall short of addressing systemic risks presented by wide-scale adoption of AI-based FinTech by financial firms, says the report.

These conditions have led to a critical juncture for the deployment of AI applications in business and finance, according to the Oulook. Financial regulators are grappling with whether and how to adapt existing rules, or create new ones, to keep pace with technological advances in AI applications, while striking the right balance between managing risks and supporting innovation.

At the international level, the OECD AI Principles, adopted in May 2019, became the first international standard agreed by governments for the responsible stewardship of trustworthy AI. The OECD, together with international partners working to support financial markets and financial sustainability, must reinforce efforts to facilitate multilateral engagement on implementing the Principles in the context of financial markets and other business sectors.

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Finance

50 Firms Collaborate to Champion Next Gen Careers in Industry

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The World Economic Forum today launches the New Generation Industry Leaders (NGIL) programme, a global community of fast-rising young industrialists to accelerate environmental and social progress in manufacturing and production sectors, transforming perceptions and inspiring a new generation to take up a career in industry.

Over 50 world-leading companies in the production ecosystem, including Apple, DHL, Johnson & Johnson, Rockwell Automation, Siemens and Stanley Black & Decker, are supporting the NGIL programme. Beyond proposing their young leaders to join the community, these companies are making their training materials available to the community and executives are acting as mentors for the community members.

Emerging technologies are transforming industries as diverse as automotive, chemicals, electronics, healthcare and textiles. But industrial production is facing a skills shortage in all areas from R&D and design to consumer behaviour and end-of-use cycles. Research from global consulting firm Korn Ferry found that by 2030, there will be a global human talent shortage of more than 85 million people, which could result in $8.5 trillion in unrealized annual revenues. The New Generation Industry Leaders community will play an active role to address these challenges.

Mark Maybury, Chief Technology Officer of Stanley Black & Decker said: “Stanley Black & Decker is honored to contribute to the establishment of the NGIL community which fills a critical gap in the leadership development of future industrial leaders. This programme inspires the next generation through exposure to visionary industrial leaders, cross connecting this worldwide cohort to foster peer-to-peer learning and transforming their future by accelerating their growth and focusing their purpose on global challenges.”

Tanja Küppers, Chief Operating Officer of DHL Supply Chain Europe, Middle East and Africa, said: “New Generation Industry Leaders have the ability to push innovative minds and fire up the hearts of people to reach great heights of sustainable performance; by embracing connectedness with the business, society and environment they act as responsible leaders towards their workforce, customers and partners.”

Members of the New Generation Industry Leaders programme are nominated by senior executives from their respective companies and organizations. The first cohort of leaders numbers over 100, of whom half are women. They represent more than 20 countries and 12 industrial sectors, including energy, automotive, mining and metals. Each cohort of new leaders will embark on an 18-month journey embracing the following principles and activities:

· Get inspired: learning modules in strategy, leadership and operations, delivered by thought leaders, CEOs and senior executives from the production ecosystem.

· Connect: peer networking sessions to learn from each other’s unique workplaces and career experiences and to share ideas, challenges and solutions.

· Transform: smaller cross-industry teams to help accelerate responsible industry transformation and co-create new ideas to get the world excited about new opportunities and innovations in manufacturing and production.

Members agree to collaborate to drive positive change within each impact area in their own organizations, with the goal of leveraging their shared efforts to engage with and attract younger generations.

Jeremy Jurgens, Managing Director at the World Economic Forum, said: “The transformation in manufacturing and production being driven by the Fourth Industrial Revolution can only succeed with the leadership and collaboration of young professionals. We are thrilled to announce the launch of this inaugural group of exceptional leaders who will challenge their peers to embrace the incredible opportunities promised by a career in industry.”

Lawrence Whittle, Chief Executive Office of global technology firm Parsable, said: “Today’s factories are the most technologically advanced work environments in the world. So much innovation is happening in industrial sectors. But industry has an image problem – it’s not seen by young people as tech-savvy or future-focused. We urgently need to change perceptions around a career in manufacturing to attract and retain the finest talent from mobile-first generations.”

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