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Is it time to review China’s ‘developing country’ status at the WTO, considering its economic might?

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US president Donald Trump criticised China for engaging in unfair trade practices by taking advantage of its ‘developing country’ status in World Trade Organisation. President Trump also criticised World Trade Organisation for allowing countries like India, China, South Africa to engage in such practices that effect American economic interests. (Mason and Lawder 2019)

Trump argues that China is not a developing economy as it claims to be. He considers China to be developed economy that does not deserve preferential treatment from the WTO and developed countries such as the USA.(Mason and Lawder 2019)

China is the second largest economy in the world with $13.37 billion GDP. China is a major source of foreign direct investment in all corners of the world and provides billions of dollars in overseas development assistance. Twelve of the 100 largest companies in the world by capitalisation are Chinese, as are roughly one in eight of the world’s billionaires. (Cutler and Doyle 2019)

The question of Chinese exploitation of WTO arises due to the economic explosion China has achieved over 30 years. It is the world’s second largest economy and yet unlike any other country enjoys the economic benefits arising out of being categorised as a developing country. This article will further go ahead to trace China’s journey to WTO and the result of being a developing country in WTO.

Tracing China’s journey to WTO

After the heavy destruction caused by World War 2, countries including United states, United Kingdom and allied forces came together to discuss the economic reconstruction of the world. This meeting was called the Bretton Woods Conference. As a result of the conference, countries came together to establish the International Bank for Reconstruction and Development (IBRD) and International Monetary Fund (IMF).

International Trade Organisation (ITO)was also proposed to establish rules and regulations for international trade. But this was not supported by USA and hence, ITO could not come into existence. GATT or General Agreement on Trade and Tariffs was adopted in its place.

On July 10, 1986 China signed the General Agreement on Trade and Tariffs. Later, in the 1995 Uruguay rounds, GATT was replaced by World Trade Organisation (WTO). GATT only focussed on goods trade and did not cover trade in services and Intellectual Property Right.(Lardy 2001)

While GATT is set of multiple agreements signed and abided by nations, WTO is an intergovernmental organisation which focussed on trade of goods, services and intellectual property rights. (Lardy 2001)

After the opening up of its economy, China witnessed rapid growth in 1980’s. China had massive trade and ability to attract foreign direct investment. Chinese leadership came to understand that their liberal foreign investment regime and low-cost labour markets give them a wonderful opportunity to participate and compete in international markets and that this participation could provide a sustainable base for the continued growth and development of their domestic economy. (Lardy 2001)China requested to join WTO in November 1995, and on December 11, 2001, it officially became a member of WTO.

World Trade Organisation (WTO)

The WTO has 164 members and 23 observer governments including Iran, Iraq, Bhutan, Libya etc. (“WTO | Development)

WTO functions(“WTO | Development)

  • Administering WTO Trade Agreement
    • Act as forum for trade negotiation
    • Handling trade disputes
    • Monitoring trade policies
    • Cooperation with other international organization

WTO Agreements(“WTO | Development)

  • For Goods – Marrakesh Agreement (1995) and Trade Facilitation Agreement (2017)
    • For Services – General Agreement on Trade in Services
    • For Intellectual Property – The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Benefits to Developing Countries in WTO:

Special and Preferential Treatment

The WTO Agreements contain special provisions which give developing countries some levy and benefits in their conduction of trade. The WTO also makes developed countries treat developing countries more favourably than other WTO Members. These provisions are referred to as “special and differential treatment” (S&D) provisions.(“WTO | Development)

The special provisions include:

  • longer time periods for implementing Agreements and commitments
  • measures to increase trading opportunities for developing countries
  • provisions requiring all WTO members to safeguard the trade interests of developing countries
  • support to help developing countries build the capacity to carry out WTO work, handle disputes, and implement technical standards, and
  • provisions related to least-developed country Members.

It is important to note here that the WTO does not define countries as developed or developing. Countries declare their status themselves. According to the WTO, two-thirds of its 164 members, including China, currently consider themselves developing countries.

Non-Reciprocal Preferential Treatment

Non reciprocal preferential treatment for developing countries states that the grants and trade concessions given by developed countries to developing countries are not on reciprocal basis. It means the developing countries are not expected to make matching offers or concessions in return to the developed countries. (“WTO | Development)

Restrict Imports

GATT and WTO give developing countries the right to restrict imports in order to promote or protect their local industries or assist in cases of Balance of Payment difficulties. (“WTO | Development)

The World Trade Organisation explicitly states that international trade should benefit the economic development of developing and least developed countries. (“WTO | Development) The above-mentioned provisions also facilitate the same. This is to ensure that developing countries protect their agriculture sector and other industries which might be affected due to competition from goods of developed countries.

How did the developing country status facilitate Chinese economic growth?

China with its industrial strength, facilitated voluminous trade and enjoyed the benefits of free trade with other countries while protecting its local industries at the same time. The developing country status allowed China to subsidise its industries, support state-owned firms and discriminate against foreign investors. It had the opportunity to expand its domestic industries exponentially and further improve trade. This can be understood by the given data.

In 1995, Chinese imports and exports of goods totalled to $280.9 billion or 3 percent of the global trade. As of 2018, its total trade of goods jumped to $4.6 trillion or 12.4 percent of global trade. China is the world’s largest trader currently. USA comes only after China as the world’s second largest trader at 11.5 percent of total trade.(“Is China the World’s Top Trader?” 2018)

Taking advantage of the non reciprocal preferential treatment, China does not have to give concessions to developed countries like USA while they are obligated to give preferential treatment to China. China exported $480 billion worth of goods to the US in 2018 (19 percent of all its exports), but only imported $156 billion. In the case of Hong Kong, China exported $303 billion in 2017 (12.2 percent of total exports) and imported just $9 billion (0.4 percent of total imports).(“Is China the World’s Top Trader?” 2018)

Thus, in 2018, China exported $2.49 trillion in goods while it imported $2.13 trillion. China’s exports usually surpass their imports. Developed countries on the other hand, like USA, import more than they export. In 2019, USA trade deficit was $617 billion.

Chinese products and services overseas are levied lower rates of duty due to its developing country status. While China imposed high tariffs on its imports and offered more subsides to local producers, in order to protect domestic industries.

Also, the terms of WTO helped in forced transfer of technology and theft of intellectual property from the developed countries, benefitting China. (Lee 2019) Developed countries and other observers of international community claim this to be unfair asit puts developed countries at a relative disadvantage.

China’s Economic Might

China has always claimed to be a communist and socialist country. Historically, it has been dead against market reforms, opening up its economy and opposed anything that held western values. However, rapid industrialisation followed by opening up its economy, market reforms, trade with other countries, joining WTO, all facilitated rise in its economy. China has scored remarkable achievements in economic and social terms being a part of WTO. (“China in the WTO: Past, Present And Future” 2012) (Hu and Khan 1997)

  • 2nd largest economy in terms of GDP
  • 1st largest merchandise exporter
  • 2nd largest merchandise importer
  • 1st destination for inward FDI among developing countries
  • 1st investor for outward FDI among developing countries

Developing country status

In spite of its economic development, China claims that it is a developing country because of its huge population and low per capita income. China’s Gross national income per capita is $9460 as per 2018 and it is classified as upper middle-income country by world bank. (Hu and Khan 1997) As per world bank indicators, countries with Gross National Income of $12,056 and above qualify as developed country. Hence, as per criteria China claims itself to be developing country and refuses to revoke its status.

Chinese Vice Commerce Minister Wang Shouwen said that Beijing will not allow other members to deprive China of the special and differential treatment that developing members deserve. His statements suggested that China is adamant on its developing country status and would reject future commitments if China’s status was questioned. (McDONALD 2018)

Martin Khor, Director of south centre said the following about China’s developing country status, “If China is forced to take on the duties of a developed country and forego the benefits of a developing country, the west could soon ask other developing countries that are ahead of China (at least in per capita terms) to do the same. China’s fight to retain its developing country status is of interest not only to the Chinese people, but also to their counterparts in other developing countries.”

If the developing countries or parts of the world feel that the economic criteria to categorise a country as a developed or developing nation is partial or not right, countries need to fight for a revision of such criteria. The excuse that some countries do not want to comply with the established standards, citing which China refuses to revoke its status, is unacceptable.

China also claims that many WTO rules have actually favoured the US and other developed countries, in the areas of agricultural support, textile quotas and intellectual property rights protection. (Lee 2019)

China defends its developing country status with the above arguments.

Conclusion

Development is a multidimensional concept that includes GDP or GNI per capita, but it includes other dimensions as well. A particular country can be more developed in some of these dimensions, and less so in others. This multi-dimensionality complicates the classification of countries as “developed” versus “developing.” 

And hence, what really calls for a question is that, should the standards of measuring or categorising a country as developing and developed nation change? The world’s second largest economy (or actually the first largest economy as per purchasing power parity) is still categorised as a developing country. This is because the standard for such measurement is Gross Domestic Product per capita and Gross National Income per capita.

Should the feature for measurement change to nominal GDP or GDP as per PPP or any other economic indicator? A change in this criterion will bring about a lot of changes in the international economy. Is that a good change for the world? Will that change economically benefit the world countries? These questions are a subject of a whole new research.

In the current scenario, China can be rightly considered as a developing nation in WTO. When a certain standard is set it should be unbiasedly applied to all countries what so ever. However, With the approaching global recession, recent trade war between USA and China and with President Trump threatening to pull out of WTO, now is a good time to re-evaluate the economic status of countries.

I am a second-year master’s student from O.P Jindal Global University, Haryana, India currently pursuing M.A in Diplomacy, Law and Business from the Jindal School of International Affairs.

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Financial Bubbles in the Coronavirus Era

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There is reason to believe that the coronavirus will not be going anywhere soon. What is more, IMF experts warn that problems that existed before the pandemic will only worsen in the coming decades. One of these problems is the state of the global financial market, which is more susceptible to all kinds of financial bubbles than ever before.

When we talk about financial bubbles, we usually mean a sharp increase in the value of assets in an economic climate that has either stagnated or started to deteriorate. A similar situation is currently unfolding on the American stock market, which is experiencing an extraordinary rise in the value of hi-tech companies against the background of a record drop in GDP (by over 30 per cent in the second quarter of 2020) and a projected budget deficit (−15.5 per cent). This rise has been caused by three factors: 1) a soft monetary policy as a result of the need to service the rapidly growing public and corporate debt; 2) the huge liquid resources at the disposal of legal entities and individuals that are frantically looking for ways to make a profitable investment in anticipation of the increased risks and systemic uncertainties brought about by COVID-19; and 3) the speculative excitement caused by the technologies of the fourth industrial revolution. In order for us to judge how likely the optimistic sentiments of the global financial markets are to change, let us consider the impact of these factors separately.

The Debt as it Stands

A key element of the “new abnormality” that has characterized both the development of the global economy as a whole and the U.S. economy, in particular, is the debt model of economic growth. Investment and business activity has stagnated as interest rates around the world are hovering around zero, while the U.S. dollar (a key reserve currency) stubbornly refuses to depreciate and has even strengthened its value on the forex markets on a number of occasions, despite the fact that the situation at home is worsening. For example, U.S. national debt increased by $4 trillion in the first nine months of 2020, from $22.7 to $26.7 trillion. This is the largest increase in U.S. national debt ever. A considerable amount of this debt is financed through the extraordinary growth of the U.S. stock market, which currently accounts for over half of the combined capitalization of the world’s stock markets. A correction on the stock market (caused by an increase in interest rates, for example) could trigger numerous defaults on debt obligations. According to Fitch Ratings, more defaults were announced in the first five months of 2020 than in the whole of 2019 and may reach record numbers by the end of the year (the current record holder is 2009). And more than half of all corporate defaults around the world have occurred in North America.

Let us recall that the value of financial assets dropped by $50 trillion during the 2008–2009 crisis. However, central banks and the fiscal authorities compensated for these losses by injecting roughly the same amount of liquidity into the market. But the newly created financial resources did not jolt consumer demand, as had been hoped. Rather, they were largely swallowed up by various segments of the global financial market. International portfolio investments alone more than doubled in 2008–2019 – by $35 trillion.

The history of capitalism is not short on examples where the state tried to solve debt problems at the expense of the market, leading to the creation of financial pyramids. In 1720, for example, two giant financial bubbles burst at almost the same time in Europe. In an effort to clear themselves of the massive debts they had accumulated during the War of the Spanish Succession, the governments of France and England encouraged the growth of cash in circulation. This money was pumped into equity securities of Mississippi Company in France and the South Sea Company in England, which were joint-stock companies created with backing from their respective governments. The companies promised their investors huge profits that would come from overseas territories. The proceeds from the sale of shares were used to buy back government debt instruments. The stock market bubbles that appeared in France and Great Britain were the result of the governments trying to rid themselves of their excessive debt burdens and to stimulate their respective economies through inflation and debt-equity swaps. In a way, the current excitement on the U.S. stock market is reminiscent of the situation three hundred years ago.

A New Digital Bubble?

As of late September 2020, the four largest companies in the world by market capitalization were American digital brands: the computer giants Apple and Microsoft and the internet companies Amazon and Alphabet (Google). The total market capitalization of these companies has more than doubled this year to over $6 trillion. “Pessimists” believe that the U.S. over-the-counter (OTC) market is currently experiencing another boom similar to the dot-com bubble that burst in 2000. Meanwhile, “optimists” point to the huge success of FAANG stocks, Facebook, Apple, Amazon, Netflix and Google, as justification for the current market explosion. Shares in these companies outperformed the market throughout the 2010s, and prices have soared against the background of the pandemic. They currently make up 23 per cent of the total capitalization of the U.S. S&P 500 Index.

The growth in the market value of these companies is directly related to the activities of private and institutional investors around the world, who invest their savings in banks and various investment funds with their highly developed infrastructure in order to receive guaranteed profits. A number of retail investors have given an additional impulse to the dynamics of the OTC market by purchasing shares in newly created companies in the digital economy that have connected to free trading platforms such as Robinhood.

At the same time, the “optimists” believe that the comparisons with the dot-com bubble of 2000 are not entirely appropriate. A number of arguments support this claim: 1) the ratio between the market value of shares and the total annual profit is lower – 26.9 in September 2020 versus 45.8 in March 2000; 2) companies in the digital economy turn in real profits, as opposed to expected future returns; and 3) Nasdaq OTC hi-tech growth rates are more moderate – 23 per cent per year on average, compared to 43 per cent per year in the seven years before the tech bubble burst in 2000.

The dynamics of the market on the eve of the financial crisis in 2008–2009 were also characterized by an “irrational euphoria” similar to what we are seeing today. Back then, in the depths of the crisis, the G20 introduced a supranational financial monitoring system that was designed to prevent destabilizing spikes and falls in asset prices. However, experience has taught us that regulation cannot keep up with market innovation and is perennially unprepared for new challenges, primarily the digitalization of the global economy.

Technology and Politics

Historically, financial bubbles have tended to form whenever new revolutionary technologies have appeared, be it the invention of railways, electricity, automobiles, etc. Many new technologies have appeared during the Fourth Industrial Revolution (from smartphones and 3D printers to blockchain technologies and artificial intelligence) that have led to the mass automation of business processes and, consequently, the loss of jobs for a large part of the workforce, thus reducing production and operating costs significantly.

At the same time, we have not seen galloping inflation as a natural market reaction during this global crisis (all other things being equal) to the cheap money policy that has dominated the past decade. On the one hand, prices have been kept in check by the pandemic, which has pushed households and companies to hold onto their savings and made consumption more difficult due to the partial blocking of the economy. On the other hand, in the present context, a sizeable portion of the newly created liquidity is immediately swallowed up by the stock market, the U.S. stock market in particular, which continues to grow thanks to the advance funding of new technologies that are being developed at a fantastic pace. Exactly how long such a model can survive depends on at least three factors: 1) whether or not the soft monetary policy of near-zero or negative interest rates pursued by central banks will continue; 2) the ability of the market to adapt to new technological transformations; and 3) the smooth running of the international monetary system based on the U.S. dollar.

As for the latter, its functioning largely depends on the political system in the United States, and on the results of the November presidential elections in particular. One of three things will likely happen after that: 1) the current configuration of the global financial system will remain in place, with a few minor alterations here and there; 2) the existing system will undergo a major upheaval; and 3) the global financial system as we know it will collapse and a new model will take its place.

If the first scenario plays out, then the world economy will most likely continue to function in the same institutional format that we know today. If the second scenario prevails, then the radical reform of the existing system of global institutions could give the RIC countries (Russia, India and China) the bargaining power to insist on more favourable conditions for their integration into the world economy (for example, by moving away from reliance on the U.S. dollar in international transactions, promoting the use of their national currencies more actively, re-evaluating their positions within the International Monetary Fund and the World Bank alongside their partners in BRICS in order to effectively obtain a collective veto power, etc.). The third scenario would make it possible to create regional monetary and financial systems (as full-fledged independent financial structures of the emerging multipolar world) on the basis of various regional financial institutions that already exist, increasing the role of national currencies in mutual settlements and international financial instruments (or through the creation of new international liquidity in the form of national collective settlement monetary units).

Where Does Russia Stand amid the Global Turbulence?

The Russian economy demonstrated greater resilience during the first wave of the coronavirus crisis than the economies of both developed countries and the economies of its partners in BRICS. Despite the sharp decline in world prices for carbon fuel (Russia’s main export), in terms of key macroeconomic indicators, Russia has managed to maintain more stable positions than the G7 countries. As a result, the IMF predicts that Russia will have the lowest budget deficit among the world’s major economies by the end of 2020 (−4.8 per cent), with relatively low unemployment (4.9 per cent).

The Russian Federation is, in a sense, protected from financial bubbles as (unlike the United States) as it is more focused on developing the real sector of the economy rather than the financial sector. At the same time, the main problem of Russia’s integration into the global economy is the lack of stabilizing mechanisms to counter the volatile and hard-to-predict elements of the global financial market. We are talking here about the lack of a reserve currency, something that many countries use to protect themselves against external shocks, especially during periods of global crisis, when the demand for reserve assets rises sharply. Let us consider the following example. Russia has been a net creditor in the global financial system for years. As of year-end 2019, Russia’s external financial assets exceeded its external financial liabilities by $358 billion. Meanwhile, its investment income balance amounted to −$50 billion. This lop-sidedness is down to the fact that Russia places its international reserves in low-yield foreign assets and serves its foreign financial liabilities at higher interest rates. What this means is that the Russian Federation has been subsidizing those countries that issue reserve currencies for years while not always receiving adequate compensation and now living in economic isolation in the form of economic sanctions. In this context, Russia urgently needs to create its own reserve currency similar to the transferable rouble that the Soviet Union used in its trade with the Council for Mutual Economic Assistance in 1964–1990 and which existed long before other collective currencies (such as the special drawing rights, the European Currency Unit and the euro) were developed. This mechanism removed a number of inconsistencies at the regional level (the problem of imbalances in particular) that we are now seeing in connection with the use of the U.S. dollar as a means of carrying out international settlements, loans and investments around the world.

An oft-cited report by Goldman Sachs predicts that Brazil, Russia, India and China (the BRIC countries) will all be among the world’s top five economies by 2050 and, tellingly, the stock market is not the main source of financial resources for any of them. A common problem for the BRIC countries is the need to develop the enormous potential of their domestic markets by implementing large-scale infrastructure projects. A kind of dual system of monetary circulation whereby foreign trade is carried out using monetary units of account could help make this happen. Such a model would make it possible to separate the intrinsic value of money (its purchasing power) from its extrinsic value (its exchange rate). This is necessary to prevent newly created value (through the financial market) flowing from regions with low productivity to regions with high productivity. This is precisely what is happening in the Eurozone, and it is deepening the structural imbalances in the single European market. In addition, such a system would help resolve the issue of creating international liquidity without the need to move the national currency out of circulation to form unproductive national reserves or carry out speculative transactions.

Conclusion

The global economy has fallen into the trap of “new abnormality,” where incessantly creating money does not solve pressing socioeconomic problems. Other countries are following in the footsteps of the United States, repeating its domestic policy. This has resulted in the further deepening of social inequalities and imbalances at the national and global levels. Bearing in mind the fact that the United States’ share of global gross domestic product has been falling over the past 20 years, it is entirely possible that the U.S. dollar may be used less frequently in international transactions, even though the exchange rate proves favourable from time to time. To make matters worse, the unusual reaction of the markets to the monetary policy of the Federal Reserve System, along with the growing political tension in the United States, increases the risk of the destabilization of the current financial system. It should be stressed here that global economic leadership has always been tied to the leading countries consolidating their positions in both the economic and financial spheres. Clearly, we have reached the point where the only thing that will help stabilize the world economy in the long term is the more active involvement of the BRICS countries in the functioning of the global financial system.

From our partner RIAC

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Innovative ideas and investment opportunities needed to ensure a strong post-COVID recovery

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After the huge success of its opening day, AIM Digital, the first digital edition of the Annual Investment Meeting, continued to gain momentum as it reached Day 2. The three-day mega digital event, an initiative of the Ministry fo Economy, under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, concluded its second day with interactive activities that catalysed investment-generation, knowledge-enhancement, and local, regional and international collaborations.

Joined by more than 15K participants from over 170 countries, including 70+ high-level dignitaries from across the globe, the second day of AIM Dıgital witnessed a wide range of major events, from the Conference, Exhibition, Investment Roundtables, and Regional Focus sessions to Conglomerate Presentations and Startups competitions; all geared towards providing opportunities to achieve a digital, sustainable & resilient future.

In his keynote speech in the FDI session, Ministers Roundtable: Adapting to the New Flow of Trade and Investment, His Excellency Dr. Thani Al Zeyoudi, the UAE Minister of State for Foreign Trade, said: “It is my distinct honor to welcome you to the UAE’s first-ever digital edition of the Annual Investment Meeting. Thank you to everyone participating, including our panelists from the Governments of Costa Rica, Canada, Nigeria and Russia. Today’s discussion on how countries are ensuring the free flow of trade and investment could not be more timely, especially as the world grapples with the economic recovery and moves toward building a more resilient, post-COVID economy. The pandemic has significantly impacted global markets that created new challenges for trade and investment. While the challenges ahead are enormous, the UAE sees tremendous opportunity for governments and business leaders to work together through trade and investment to reshape policies, create new partnerships, leverage new technologies, and build a future global economy that is more diverse, inclusive, and sustainable. We know that FDI can bring new technology and know-how, lead to new jobs and growth, and is often the largest source of finance for economies – making today’s discussion even more imperative.”

He further stated that FDI has played a critical role in the UAE’s economic growth, with policies and measures in place, such as the Foreign Direct Investment Law enacted in 2018 to further open the UAE market to investors in certain sectors, and the issuance of Positive List, which allows for greater foreign investment across 122 activities, and increasingthe UAE’s FDI value by 32% in 2019.  He also mentioned that the UAE came in 16th of 190 countries in the World Bank Ease of Doing Business 2020 Ranking due to the country’s digitization strategies and promising business regulatory environment.

His Excellency Al Zeyoudi furthered: “The UAE is continuing to refine and implement policies that will maximize competitiveness, increase collaboration, and provide opportunities to facilitate trade and investment. Our aim is to become the #1 country for foreign investment, target zero contribution from oil to our GDP in the next 50 years, and support research, development, and innovation. The UAE’s trade and investment strategy is centered on economic diversification and focuses on enhanced investment in industries such as communications, Blockchain, artificial intelligence, robotics, and genetics. We are also initiating measures to strengthen our position as a regional leader in supplying financial and logistical services, infrastructure, energy supplies, and other services.”

He added: “The UAE believes that increased partnership and cooperation with governments and the private sector will be key to achieving our objectives. We view platforms such as the Annual Investment Meeting as instrumental in bridging the gap between nations and supporting global efforts to strengthen international trade and investment. Through this platform, we hope that participants will uncover new, innovative ideas and investment opportunities needed to build back better and ensure a strong post-COVID recovery.”

Furthermore, world-class speakers shared their viewpoints in Day 2 of the Conference highlighting Foreign Direct Investment, Foreign Portfolio Investment, Small and Medium-sized Enterprises, Startups, Future Cities, and One Belt, One Road, including H.E. Amb. Mariam Yalwaji Katagum, Minister of State, Federal Ministry of Industry Trade and Investment of The Federal Republic of Nigeria; Victoria Hernández Mora, Ministry of Economy, Industry and Commerce of Republic of Costa Rica; Hon. Victor Fedeli,  Minister of Economic Development, Job Creation and Trade of Ontario, Canada; and Sergey Cheremin, Minister of Moscow City Government Head of Department for External Economic and International Relations, among others.

Two Investment Roundtables were also held successfully at the second day of AIM Digital, concluding  with strategies to facilitate sustainable, smart and scalable investments. The Energy Roundtable was led by Laszlo Varro, the Chief Economist of International Energy Agency, which works with countries around the globe to structure energy policies towards a secure and sustainable future. Among the notable participants include H.E. Arifin Tasrif,  Minister for Energy & Mineral Resources of the Republic of Indonesia; and H.E. Gabriel Obiang, the Minister of Mines and Hydrocarbons of Equatorial Guinea. The Agriculture Roundtable was led by Islamic Development Bank Group, the multilateral development bank working to promote social and economic development in Member countries and Muslim communities worldwide, delivering impact at scale.

In addition, the second set of National Winners competed on Day 2 of the AIM Global National Champions League. Overall,  a total of 65 countries competed at this international startups competition. The top five global champions that will win a total prize of USD50,000 will be announced on the last day of AIM Digital.The competition was launched in a bid to help startups in maximizing their potential to attract funding and promote their business ideas to a global audience, getting utmost exposure and expanding their network.

Participating in the Conglomerate Presentation feature of AIM Digital is Elsewedy Electric led by Eng. Ahmed Elsewedy, its President and CEO. Elsewedy Electric began as a manufacturer of electrical components in Egypt 80 years ago, and Electric has evolved into a global provider of energy, digital and infrastructure solutions with a turnover of EGP 46.6 billion in 2019, operating in five key business sectors, namely Wire & Cable, Electrical Products, Engineering & Construction, Smart Infrastructure and Infrastructure Investments. As part of its commitment to sustainability, it has established green energy and smart metering projects across Africa, the Middle East and Eastern Europe.

The Regional Focus Sessions featured the regions of Asia and Latin America and explored the risks, challenges and opportunities for growth and regional cooperation.  Regional Focus Session on Asia brought together government officials and investment authorities from the ASEAN Member States and discussed their strategies to create a borderless and sustainable bloc that will push organic growth, as well as their approaches to gain resilience in the economy. Regional Focus Session on Latin America highlighted the significance of regional and international partnerships to combat the current pandemic and boost trade, investments and employment within the region.

Moreover, Country Presentations on Day 2 presented the outstanding features and investment opportunities in Colombia, Egypt and the Federal Democratic Republic of Ethiopia which highlighted the countries’ status as attractive investment destinations.

Another highly anticipated event in the largest virtual gathering of the global investment community is the announcement of winners for the Investment Awards and Future Cities Awards which will take place on Day 3 of AIM Digital.AIM Investment Awards will grant recognition to the world’s best Investment Promotion Agencies and the best FDI projects in each region of the globe that have contributed to the economic growth and development of their markets.   Likewise, AIM Future Cities Awards will give tribute to the best smart city solutions providers and for outstanding projects that have resulted to enhanced operational efficiency and productivity, sustainability, and economic growth.

Day 1 of AIM Dıgital welcomed the presence of globally renowned personalities such as the UAE Minister of Economy, His Excellency Abdullah bin Touq Al Marri who emphasised the vision of UAE’s wise leadership for the post-COVID era, reflecting great significance to enhancing the readiness of the country’s government sector, raising efficiencies and performance at the federal and local levels. Keynote remarks were delivered by H.E. Juri Ratas, the Prime Minister of Republic of Estonia; H.E. Rustam Minnikhanov, the President of the Republic of Tatarstan; H.E. Dr. Bandar M. H. Hajjar, the President of Islamic Development Bank Group (IsDB Group); H.E. Mohammed Ali Al Shorafa Al Hammadi, the Chairman of Abu Dhabi Department of Economic Development (ADDED); and Dr. Mukhisa Kituyi, the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).

The UAE Minister of State for Entrepreneurship and SMEs, His Excellency Dr. Ahmad Belhoul Al Falasi, underlined in his Keynote Address for the SME Pillar, that it is crucial for Startups and SMEs to be given opportunities to bounce back from the impact of pandemic and provide a conducive environment that will empower them to have the capability of supporting growth and success.

The Global Leaders Debate featured prominent keynote debaters such as Armida Salsiah Alisjahbana, the Under-Secretary-General of the United Nations and Executive Secretary of United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP); Mohamed Alabbar, the Founder of Emaar Properties, Alabbar Enterprises and Noon.com; Mohammad Abdullah Abunayyan, the Chairman of ACWA Power; and Arkady Dvorkovich, the Chairman of Skolkovo Foundation, who discussed the strategies to restructure the economies in overcoming the consequences of the pandemic.

The first digital edition of the Annual Investment Meeting with the theme “Reimagining Economies: The Move Towards a Digital, Sustainable and Resilient Future, will be held until the 22nd of October 2020.

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H.E. Dr. Thani Al Zeyoudi: Our aim is to become the #1 country for foreign investment

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It is my distinct honor to welcome you to the UAE’s first-ever digital edition of the Annual Investment Meeting. Thank you to everyone participating, including our panelists from the Governments of Costa Rica, Canada, Nigeria and Russia. Today’s discussion on how countries are ensuring the free flow of trade and investment could not be more timely, especially as the world grapples with the economic recovery and moves toward building a more resilient, post-COVID economy.

As you know, the pandemic has significantly impacted global markets, creating new challenges for trade and investment. According to the United Nations’2020World Investment Report, global FDI flows are estimated to decrease by up to 40% this year, dropping well below their value of $1.54 trillion in 2019. This would bring global FDI below $1 trillion for the first time since 2005. Global FDI flows are expected to decline even further in 2021, by 5% to 10%, and only in 2022 do we expect to start seeing markets recover.

While the challenges ahead are enormous, the UAE sees tremendous opportunity for governments and business leaders to work together through trade and investment to reshape policies, create new partnerships, leverage new technologies, and build a future global economy that is more diverse, inclusive, and sustainable. We know that FDI can bring new technology and know-how, lead to new jobs and growth, and is often the largest source of finance for economies – making today’s discussion even more imperative.

For the UAE, FDI has played a critical role in our economic growth. In 2019, the UAE was the largest recipient of FDI in the region, largely due to our increased focus over the years on enhancing local conditions to attract FDI. With policies and measures in place, such as our Foreign Direct Investment Law enacted in 2018 to further open the UAE market to investors in certain sectors, and the issuance of our Positive List, which allows for greater foreign investment across 122 activities, the UAE was able to increase our FDI value by 32% in 2019. The UAE also came in 16th of 190 countries in the World Bank Ease of Doing Business 2020 Ranking due to our digitization strategies and promising business regulatory environment.

The UAE is continuing to refine and implement policies that will maximize competitiveness, increase collaboration, and provide opportunities to facilitate trade and investment. Our aim is to become the #1 country for foreign investment, target zero contribution from oil to our GDP in the next 50 years, and support research, development, and innovation. The UAE’s trade and investment strategy is centered on economic diversification and focuses on enhanced investment in industries such as communications, Blockchain, artificial intelligence, robotics, and genetics. We are also initiating measures to strengthen our position as a regional leader in supplying financial and logistical services, infrastructure, energy supplies, and other services.

The UAE believes that increased partnership and cooperation with governments and the private sector will be key to achieving our objectives. We view platforms such as the Annual Investment Meeting as instrumental in bridging the gap between nations and supporting global efforts to strengthen international trade and investment. Through this platform, we hope that participants will uncover new, innovative ideas and investment opportunities needed to build back better and ensure a strong post-COVID recovery.

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