Central America Innovates in Poverty Reduction through Investment Promotion

Sept. 30, 2010 - PRLog -- The Investment Promotion Agencies (IPAs) of Central America, with the support of the United Nations Development Programme (UNDP), recently organized the Side Event “Investment Promotion: Paving the Way Towards Poverty Eradication” in New York City during the high-level United Nation’s Millennium Development Goals Summit, that was held from the 20th through the 22nd of September. The Side Event’s objectives were to demonstrate how investment promotion activities significantly contribute in eradicating poverty and to seek support for these initiatives from the international community.

Among the attendees were Rebeca Grynspan, Associate Administrator of UNDP; Heraldo Muñoz, Assistant Secretary-General and Regional Director of the Regional Bureau for Latin America and the Caribbean of the UNDP; and Ammir Dossal, Executive Director of the United Nations Office for Partnerships (UNOP), as well as representatives from the Government of Nicaragua and Central American IPAs.

The presentation was made by Javier Chamorro, Executive Director of PRONicaragua and Representative of Central America and the Caribbean to the World Association of Investment Promotion Agencies’ (WAIPA) Steering Committee. Chamorro highlighted how investment promotion efforts in Central America have contributed in advancing towards the achievement of Millennium Development Goal 1: “Eradicate extreme poverty and hunger”, which calls to halve the proportion of people whose income is less than US$1 a day and achieve full and productive employment and decent work for all. The presentation showed how foreign direct investment (FDI) constitutes an important tool in achieving economic development by fostering job generation, technology transfer, export growth, productive linkages, world-class business practices and corporate social responsibility towards employees, the environment and the local communities.

“This event was a firm step – and a clear sign – on behalf of the Central American countries in our efforts to position ourselves as a region and strengthen our advantages as an investment destination, while at the same time demonstrating the key role FDI plays in eradicating poverty in our countries,” commented Mario España, Investment Promotion Director of Guatemala’s Trade & Investment.

Statistics of the Central American IPAs indicate that their efforts represent an effective way to eradicate poverty. In the region, every dollar used for investment promotion activities has resulted in nearly US$142 in FDI and that for every US$191 executed by the IPAs has resulted in one formal job created. During the 2000–2009 period, the Central American IPAs have attracted an average of nearly US$132 million and created approximately 5,400 jobs per year through investment promotion activities. However, according to the Economic Commission for Latin America and the Caribbean (ECLAC), 22 percent of Central America’s population still lives under circumstances of extreme poverty, which calls for immediate further actions to alleviate this dramatic situation.

The program also included a discussion panel conformed by Luis Felipe Lopez Calva, Former Chief Economist at the Regional Bureau of Latin America and the Caribbean of the UNDP; Damien Shiels, Senior Investment Promotion Officer of the Foreign Investment Advisory Service (FIAS); and Paul Oquist, Minister of National Policy of the Government of Nicaragua and Member of the United Nations Committee of Experts on Public Administration. The panelists stressed the positive impact of investment promotion on economic development and poverty reduction, while urging potential donors to support this kind of initiatives in developing regions such as Central America.

According to the latest statistics of the Organisation for Economic Co-operation and Development (OECD), Official Development Assistance (ODA) to the American continent reached US$9.3 billion in 2008, representing barely 7.02% of the US$131 billion in FDI flows in the region that same year, which offers a unique perspective on how FDI may have a much larger impact on economic development than ODA. Moreover, supporting investment promotion activities constitutes an innovative mechanism to achieve poverty reduction and generate economic development in Central America, given the high levels of return.