Policies To Reap Benefits From MNCs Mooted

New Delhi, November 28: | Updated: Nov 29 2002, 05:30am hrs
Multinational corporations (MNCs) can contribute to the competitiveness of a country, but benefits are not automatic. For this the policies of the host country should move from static to dynamic gains, said Karl P Sauvant, director, division of investment and enterprise development, Unctad.

Dr Sauvant, the Geneva-based chief author of the World Investment Report was speaking to reporters here on Thursday. At a discussion organised by the UN Information Office and Unctad, he said countries should not only need to pay attention to attracting export-oriented MNC activities but also pursue active policies to increase the benefits from MNC activities once they start.

A more competitive environment offers both opportunities and challenges for attracting foreign direct investment (FDI). The prospects of India attracting more FDI in the near future are extremely bright in the near future in view of its highly satisfactory growth rate of more than 5 per cent and progressively liberalised investment regime, he said.

The regulatory regime in India is quite liberal and it is improving, Dr Sauvant said. However, the fact India got 60 per cent more FDI in the first half of this calender year as compared to the same period last year may be due to lumpiness, he said. That is, since Indias share in global FDI is relatively small, even one big investment may lead to a quantum jump, he said.

The Unctad official pointed out that in many places in the world opposition to FDI exists.

Torbjorn Fredriksson, economic affairs officer, division on investment, technology and enterprise development, Unctad, also participated in the discussion. Commenting on the impact on privatisation on FDI, he said privatisation can attract FDI but it also depends on the nature of privatised companies.

The English-speaking public is another great attraction for MNCs and FDI, Dr Fredriksson said. In some countries, like the Philippines, the English-knowing population has been an important factor in attracting FDI.