least 22 large M&A deals were withdrawn or blocked for regulatory or political reasons-twice as many as in 2017. Screening mechanisms for foreign investment are gaining importance.Since 2011,at least 11 countries have introduced new screening frameworks and at least 41 amendments have been made to existing regimes.Changes included adding sectors or activities subject to screening,lowering the triggering thresholds or broadening the definition of foreign investment.Other new regulations have expanded disclosure obligations of foreign investors,extended statutory timelines of screening procedures or introduced new civil,criminal or administrative penalties for not respecting notification obligations Nevertheless,attracting investment remains a priority.The majority of new investment policy measures still moved in the direction of liberalization, promotion and facilitation.Numerous countries removed or lowered entry restrictions for foreign investors in a variety of industries.The trend towards simplifying or streamlining administrative procedures for foreign investment continued.Also,several countries provided new fiscal incentives for investment in specific industries or regions. International investment policymaking is in a dynamic phase,with far-reaching implications.In 2018,countries signed 40 international investment agreements (IIAs).For at least 24 existing treaties,terminations entered into effect.The impact on the global IlA regime of novel features in new agreements,including some megaregional treaties with key investor countries,will be significant. Many countries are also developing new model treaties and guiding principles to shape future treaty making. IlA reform is progressing,but much remains to be done.Almost all new treaties contain numerous elements in line with UNCTAD's Reform Package for the International Investment Regime.UNCTAD's policy tools have also spurred initial action to modernize old-generation treaties Increasingly,countries interpret,amend,replace or terminate outdated treaties.However,the stock of n2018 old-generation treaties is 10 times larger than the number of modern,reform-oriented treaties.Investors Total llAs in force continue to resort to old-generation treaties;in 2018, 2658 they brought at least 71 new investor-State dispute settlement(ISDS)cases. World mestmen Report 2019Spd Ecom o
least 22 large M&A deals were withdrawn or blocked for regulatory or political reasons – twice as many as in 2017. Screening mechanisms for foreign investment are gaining importance. Since 2011, at least 11 countries have introduced new screening frameworks and at least 41 amendments have been made to existing regimes. Changes included adding sectors or activities subject to screening, lowering the triggering thresholds or broadening the definition of foreign investment. Other new regulations have expanded disclosure obligations of foreign investors, extended statutory timelines of screening procedures or introduced new civil, criminal or administrative penalties for not respecting notification obligations. Nevertheless, attracting investment remains a priority. The majority of new investment policy measures still moved in the direction of liberalization, promotion and facilitation. Numerous countries removed or lowered entry restrictions for foreign investors in a variety of industries. The trend towards simplifying or streamlining administrative procedures for foreign investment continued. Also, several countries provided new fiscal incentives for investment in specific industries or regions. International investment policymaking is in a dynamic phase, with far-reaching implications. In 2018, countries signed 40 international investment agreements (IIAs). For at least 24 existing treaties, terminations entered into effect. The impact on the global IIA regime of novel features in new agreements, including some megaregional treaties with key investor countries, will be significant. Many countries are also developing new model treaties and guiding principles to shape future treaty making. IIA reform is progressing, but much remains to be done. Almost all new treaties contain numerous elements in line with UNCTAD’s Reform Package for the International Investment Regime. UNCTAD’s policy tools have also spurred initial action to modernize old-generation treaties. Increasingly, countries interpret, amend, replace or terminate outdated treaties. However, the stock of old-generation treaties is 10 times larger than the number of modern, reform-oriented treaties. Investors continue to resort to old-generation treaties; in 2018, they brought at least 71 new investor–State dispute settlement (ISDS) cases. Total IIAs in force 2 658 40 in 2018 + ISDS cases 71new chaper 1-2 chaper 3 66% 34% Liberalization/promotion Restriction/regulation National investment policy measures - $1.3 trillion 13% Global FDI 2018 Green eld investment in manufacturing up 35% 1/3 Top 100 MNEs account for more than of business-funded R&D worldwide 5 400 147 across economies zones SEZ Sustainable Pro t and Loss Development Statement FDI downward trend Developed Developing $557 bn $706 bn Transition $34 bn 2007–2018 Bilateral building developing countries Z NESin partnerships New type of SEZ: SDG model zone xii World Investment Report 2019 Special Economic Zones
IIA reform actions are also creating new challenges.New treaties aim to improve balance and flexibility,but they also make the IIA regime less homogenous.Different new approaches to ISDS reform,ranging from traditional ad ISDS cases hoc tribunals to a standing court or to no ISDS,add to broader systemic complexity.Moreover,reform efforts are occurring in parallel and often in isolation.Effectively harnessing international investment relations for the pursuit of sustainable development requires holistic and synchronized reform through an inclusive and transparent process.UNCTAD can play an important facilitating role in this regard. Sustainable capital market trends Capital market policies and instruments designed to promote the integration of sustainability into business and investment practices are transitioning from niche to mainstream.A growing number of investors are integrating ESG factors into their investment decision making to enhance performance and mitigate risk. The positive track record of sustainability-themed products is reinforcing the views of asset managers and securities regulators that such factors are material to long-term investment performance.As these sustainable investment trends take root and expand,they can have a stronger influence on the operational policies and practices of MNEs. SPECIAL ECONOMIC ZONES Special economic zones (SEZs)are widely used in most developing and many developed economies.Within these geographically delimited areas governments facilitate industrial activity through fiscal and regulatory incentives and infrastructure support.There are nearly 5,400 zones across 5400 147 economies today,up from about 4,000 five years ago,and more than 500 new SEZs are in the pipeline.The SEZ boom zones is part of a new wave of industrial policies and a response to across increasing competition for internationally mobile investment. SEZs come in many types.Basic free zones focused on facilitating trade logistics are most common in developed countries.Developing economies tend to employ integrated economies KMes可s
IIA reform actions are also creating new challenges. New treaties aim to improve balance and flexibility, but they also make the IIA regime less homogenous. Different approaches to ISDS reform, ranging from traditional ad hoc tribunals to a standing court or to no ISDS, add to broader systemic complexity. Moreover, reform efforts are occurring in parallel and often in isolation. Effectively harnessing international investment relations for the pursuit of sustainable development requires holistic and synchronized reform through an inclusive and transparent process. UNCTAD can play an important facilitating role in this regard. Sustainable capital market trends Capital market policies and instruments designed to promote the integration of sustainability into business and investment practices are transitioning from niche to mainstream. A growing number of investors are integrating ESG factors into their investment decision making to enhance performance and mitigate risk. The positive track record of sustainability-themed products is reinforcing the views of asset managers and securities regulators that such factors are material to long-term investment performance. As these sustainable investment trends take root and expand, they can have a stronger influence on the operational policies and practices of MNEs. SPECIAL ECONOMIC ZONES Special economic zones (SEZs) are widely used in most developing and many developed economies. Within these geographically delimited areas governments facilitate industrial activity through fiscal and regulatory incentives and infrastructure support. There are nearly 5,400 zones across 147 economies today, up from about 4,000 five years ago, and more than 500 new SEZs are in the pipeline. The SEZ boom is part of a new wave of industrial policies and a response to increasing competition for internationally mobile investment. SEZs come in many types. Basic free zones focused on facilitating trade logistics are most common in developed countries. Developing economies tend to employ integrated Total IIAs in force 2 658 40 in 2018 + ISDS cases 71new chaper 1-2 chaper 3 66% 34% Liberalization/promotion Restriction/regulation National investment policy measures - $1.3 trillion 13% Global FDI 2018 Green eld investment in manufacturing up 35% 1/3 Top 100 MNEs account for more than of business-funded R&D worldwide 5 400 147 across economies zones SEZ Sustainable Pro t and Loss Development Statement FDI downward trend Developed Developing $557 bn $706 bn Transition $34 bn 2007–2018 Bilateral building developing countries Z NESin partnerships New type of SEZ: SDG model zone Total IIAs in force 2 658 40 in 2018 + ISDS cases 71new chaper 1-2 chaper 3 66% 34% Liberalization/promotion Restriction/regulation National investment policy measures - $1.3 trillion 13% Global FDI 2018 Green eld investment in manufacturing up 35% 1/3 Top 100 MNEs account for more than of business-funded R&D worldwide 5 400 147 across economies zones SEZ Sustainable Pro t and Loss Development Statement FDI downward trend Developed Developing $557 bn $706 bn Transition $34 bn 2007–2018 Bilateral building developing countries Z NESin partnerships New type of SEZ: SDG model zone Key Messages xiii
Bilateral zones aimed at industrial development,which can be multi- partnerships industry,specialized or focused on developing innovation building capabilities.The degree and type of specialization is closely linked to countries'level of industrialization,following an SEZ ZNESin development ladder. developina Many new types of SEZs and innovative zone development countres programmes are emerging.Some focus on new industries,such as high-tech,financial services,or tourism-moving beyond the trade-and labour-intensive manufacturing activities of traditional SEZs.Others focus on environmental performance,science commercialization,regional development or urban regeneration. International cooperation on zone develooment is increasinaly common.Many zones in developing countries are being built through bilateral partnerships or as part of development cooperation programmes.Regional development zones and cross-border zones spanning two or three countries are becoming a feature of regional economic cooperation. SEZs can make important contributions to growth and development.They can help attract investment.create jobs and boost exports-both directly and indirectly where they succeed in building linkages with the broader economy Zones can also support global value chain (GVC)participation,industrial upgrading and diversification.However,none of these benefits are automatic. In fact,the performance of many zones remains below expectations.SEZs are neither a precondition nor a guarantee for higher FDl inflows or GVC participation. Where they lift economic growth,the stimulus tends to be temporary:after the build-up period,most zones grow at the same rate as the national economy. And too many zones operate as enclaves with limited impact beyond their confines. Only a few countries regularly assess the performance SEZ Sustainable and economic impact of zones.Doing so is critical, because the turnaround of unsuccessful SEZs Development requires timely diagnosis,especially when there Profit and Loss has been a significant level of public investment in Statement zone development.UNCTAD's SEZ Sustainable Development Profit and Loss Statement (P&L)can guide policymakers in the design of a comprehensive monitoring and evaluation system. Wrld lmestmant Repart2019pm
zones aimed at industrial development, which can be multiindustry, specialized or focused on developing innovation capabilities. The degree and type of specialization is closely linked to countries’ level of industrialization, following an SEZ development ladder. Many new types of SEZs and innovative zone development programmes are emerging. Some focus on new industries, such as high-tech, financial services, or tourism – moving beyond the trade- and labour-intensive manufacturing activities of traditional SEZs. Others focus on environmental performance, science commercialization, regional development or urban regeneration. International cooperation on zone development is increasingly common. Many zones in developing countries are being built through bilateral partnerships or as part of development cooperation programmes. Regional development zones and cross-border zones spanning two or three countries are becoming a feature of regional economic cooperation. SEZs can make important contributions to growth and development. They can help attract investment, create jobs and boost exports – both directly and indirectly where they succeed in building linkages with the broader economy. Zones can also support global value chain (GVC) participation, industrial upgrading and diversification. However, none of these benefits are automatic. In fact, the performance of many zones remains below expectations. SEZs are neither a precondition nor a guarantee for higher FDI inflows or GVC participation. Where they lift economic growth, the stimulus tends to be temporary: after the build-up period, most zones grow at the same rate as the national economy. And too many zones operate as enclaves with limited impact beyond their confines. Only a few countries regularly assess the performance and economic impact of zones. Doing so is critical, because the turnaround of unsuccessful SEZs requires timely diagnosis, especially when there has been a significant level of public investment in zone development. UNCTAD’s SEZ Sustainable Development Profit and Loss Statement (P&L) can guide policymakers in the design of a comprehensive monitoring and evaluation system. Total IIAs in force 2 658 40 in 2018 + ISDS cases 71new chaper 1-2 chaper 3 66% 34% Liberalization/promotion Restriction/regulation National investment policy measures - $1.3 trillion 13% Global FDI 2018 Green eld investment in manufacturing up 35% 1/3 Top 100 MNEs account for more than of business-funded R&D worldwide 5 400 147 across economies zones SEZ Sustainable Pro t and Loss Development Statement FDI downward trend Developed Developing $557 bn $706 bn Transition $34 bn 2007–2018 Bilateral building developing countries Z NESin partnerships New type of SEZ: SDG model zone Total IIAs in force 2 658 40 in 2018 + ISDS cases 71new chaper 1-2 chaper 3 66% 34% Liberalization/promotion Restriction/regulation National investment policy measures - $1.3 trillion 13% Global FDI 2018 Green eld investment in manufacturing up 35% 1/3 Top 100 MNEs account for more than of business-funded R&D worldwide 5 400 147 across economies zones SEZ Sustainable Pro t and Loss Development Statement FDI downward trend Developed Developing $557 bn $706 bn Transition $34 bn 2007–2018 Bilateral building developing countries Z NESin partnerships New type of SEZ: SDG model zone xiv World Investment Report 2019 Special Economic Zones
The decades-long experience with SEZs provides important lessons for modern zone development: Strategic design of the SEZ policy framework and development programme is crucial.Zone policies should not be formulated in isolation from their broader policy context,including investment,trade and tax policies.The types of zones and their specialization should build on existing competitive advantages and capabilities.And long-term zone development plans should be guided by the SEZ development ladder. Zone development programmes should take a frugal approach.The Sustainable Development P&L emphasizes the need for financial and fiscal sustainability of zones,as their broader economic growth impact can be uncertain and take time to materialize.High upfront costs due to overspecification,subsidies for zone occupants and transfers to zone regimes of already-operating firms pose the greatest risks to fiscal viability. The success of individual SEZs depends on getting the basics right.Most failures can be traced back to problems such as poor site locations that require heavy capital expenditures or that are far away from infrastructure hubs or cities with sufficient pools of labour;unreliable power supplies;poor zone design with inadequate facilities or maintenance:or overly cumbersome administrative procedures. Active support to promote clusters and linkages is key to maximizing development impact.Firms operating in zones have greater scope to collaborate,pool resources and share facilities-more so in specialized zones,but multi-activity zones can extract some of the benefits of co- location.Pro-active identification of opportunities,matching efforts and training programmes,with firms within and outside the zone,significantly boosts the impact. 。 A solid regulatory framework,strong institutions and good govemance are critical success factors.The legal infrastructure of SEZs should ensure consistent,transparent and predictable implementation of SEZ policies.The responsibilities of SEZ governing bodies should be clearly defined.Zones benefit from havina public and private sector representatives on their boards. Looking ahead,SEZs face new challenges The sustainable development agenda increasingly drives MNEs'strategic decisions and operations,which should be reflected in the value proposition Key Mess可sXw
The decades-long experience with SEZs provides important lessons for modern zone development: • Strategic design of the SEZ policy framework and development programme is crucial. Zone policies should not be formulated in isolation from their broader policy context, including investment, trade and tax policies. The types of zones and their specialization should build on existing competitive advantages and capabilities. And long-term zone development plans should be guided by the SEZ development ladder. • Zone development programmes should take a frugal approach. The Sustainable Development P&L emphasizes the need for financial and fiscal sustainability of zones, as their broader economic growth impact can be uncertain and take time to materialize. High upfront costs due to overspecification, subsidies for zone occupants and transfers to zone regimes of already-operating firms pose the greatest risks to fiscal viability. • The success of individual SEZs depends on getting the basics right. Most failures can be traced back to problems such as poor site locations that require heavy capital expenditures or that are far away from infrastructure hubs or cities with sufficient pools of labour; unreliable power supplies; poor zone design with inadequate facilities or maintenance; or overly cumbersome administrative procedures. • Active support to promote clusters and linkages is key to maximizing development impact. Firms operating in zones have greater scope to collaborate, pool resources and share facilities – more so in specialized zones, but multi-activity zones can extract some of the benefits of colocation. Pro-active identification of opportunities, matching efforts and training programmes, with firms within and outside the zone, significantly boosts the impact. • A solid regulatory framework, strong institutions and good governance are critical success factors. The legal infrastructure of SEZs should ensure consistent, transparent and predictable implementation of SEZ policies. The responsibilities of SEZ governing bodies should be clearly defined. Zones benefit from having public and private sector representatives on their boards. Looking ahead, SEZs face new challenges: • The sustainable development agenda increasingly drives MNEs’ strategic decisions and operations, which should be reflected in the value proposition Key Messages xv
that SEZs market to investors.Modern SEZs can make a positive contribution to the ESG performance of countries'industrial bases.Controls,enforcement and services (e.g.inspectors,health services,waste management and renewable energy installations)can be provided more easily and cheaply in the confined areas of SEZs. SEZs are traditionally big employers of women,with about 60 per cent female employees on average.Some modern zones are implementing gender equality regulations,such as anti-discrimination rules,and support services,such as child care and schooling facilities,setting new standards for SDG performance. 。 The new industrial revolution and the digital economy are changing manufacturing industries-the main clients of SEZs.SEZs will need to adapt their value propositions to include access to skilled resources,high levels of data connectivity and relevant technology service providers.SEZs may also have new opportuniies to target digital firms The current challenging global policy environment for trade and investment, with rising protectionism,shifting trade preferences and a prevalence of regional economic cooperation,is causing changes in pattems of intemational production and GVCs.These changes can significantly affect the competitiveness of SEZs,which function as central nodes in GVCs.International cooperation on zone development is likely to become increasingly important. Finally,the 2030 Agenda to achieve the Sustainable Development Goals(SDGs) provides an opportunity for the development of an entirely new type of SEZ: the SDG model zone.Such zones would aim to attract investment in SDG- relevant activities,adopt the highest levels of ESG standards and compliance, and promote inclusive growth through linkages and spillovers The recommendations in this report aim to provide guidance for policymakers in their efforts to revitalize and upgrade existing zones,and to build new ones that avoid the pitfalls of the past and are prepared for the challenges ahead.The New type of SEZ: key objective should be to make SEZs work for the SDGs:from privileged enclaves to sources SDG model zone of widespread benefits World mstmen Report 2019Spd Ecom Zo
that SEZs market to investors. Modern SEZs can make a positive contribution to the ESG performance of countries’ industrial bases. Controls, enforcement and services (e.g. inspectors, health services, waste management and renewable energy installations) can be provided more easily and cheaply in the confined areas of SEZs. SEZs are traditionally big employers of women, with about 60 per cent female employees on average. Some modern zones are implementing gender equality regulations, such as anti-discrimination rules, and support services, such as child care and schooling facilities, setting new standards for SDG performance. • The new industrial revolution and the digital economy are changing manufacturing industries – the main clients of SEZs. SEZs will need to adapt their value propositions to include access to skilled resources, high levels of data connectivity and relevant technology service providers. SEZs may also have new opportunities to target digital firms. • The current challenging global policy environment for trade and investment, with rising protectionism, shifting trade preferences and a prevalence of regional economic cooperation, is causing changes in patterns of international production and GVCs. These changes can significantly affect the competitiveness of SEZs, which function as central nodes in GVCs. International cooperation on zone development is likely to become increasingly important. Finally, the 2030 Agenda to achieve the Sustainable Development Goals (SDGs) provides an opportunity for the development of an entirely new type of SEZ: the SDG model zone. Such zones would aim to attract investment in SDGrelevant activities, adopt the highest levels of ESG standards and compliance, and promote inclusive growth through linkages and spillovers. The recommendations in this report aim to provide guidance for policymakers in their efforts to revitalize and upgrade existing zones, and to build new ones that avoid the pitfalls of the past and are prepared for the challenges ahead. The key objective should be to make SEZs work for the SDGs: from privileged enclaves to sources of widespread benefits. Total IIAs in force 2 658 40 in 2018 + ISDS cases 71new chaper 1-2 chaper 3 66% 34% Liberalization/promotion Restriction/regulation National investment policy measures - $1.3 trillion 13% Global FDI 2018 Green eld investment in manufacturing up 35% 1/3 Top 100 MNEs account for more than of business-funded R&D worldwide 5 400 147 across economies zones SEZ Sustainable Pro t and Loss Development Statement FDI downward trend Developed Developing $557 bn $706 bn Transition $34 bn 2007–2018 Bilateral building developing countries Z NESin partnerships New type of SEZ: SDG model zone xvi World Investment Report 2019 Special Economic Zones