As a unique platform for dialogue with the private sector, EMnet produces periodic Policy Notes providing an overview of the private sector’s perspective on doing business in emerging economies.
Discussions held during EMnet meetings and insights from our members feed into our Notes, which are circulated to businesses, policy makers and OECD experts.
The 2017 edition of Business Insights on Emerging Markets captures what multinational companies engaged in emerging markets say is necessary to revive growth, trade and investment in a challenging economic context. The analysis builds on discussions held during events organised by the OECD Emerging Markets Network (EMnet), the Development Centre’s business platform promoting policy dialogue between top executives, high-level government officials and senior OECD experts on doing business in Africa, Asia and Latin America. Informed dialogue between policy makers and businesses is essential to unlocking the benefits of private sector action, particularly in order to create new job opportunities for young people, build quality infrastructure and promote innovation and new technologies.
EMnet meetings in 2016 discussed urbanisation in Africa, regional integration in Asia, trade and investment in Latin America and the Paris Agreement at COP21. These built on recent OECD analysis and studies such as the Development Centre’s Regional Economic Outlooks. Find each individual policy note below.
This 2017 edition of the EMnet Africa Policy Note provides insights and policy recommendations from the private sector on investment challenges in African cities. The note examines the latest macroeconomic trends on the continent and provides an overview of recent urbanisation policies, highlighting how policy makers are supporting private-sector led investments in African cities. The analysis builds on discussions from the business meeting held on 30 September 2016 at the OECD headquarters in Paris and organised by the OECD Emerging Markets Network (EMnet) as well as on the analysis of the African Economic Outlook 2016, in addition to desk research and bilateral discussions with EMnet members.
Key messages include:
By joining forces with local partners, firms have been successful in investing in African urban markets. A thorough understanding of local specificities and a multistage approach have been indicated as key success factors of foreign direct investments.
To build more efficient and sustainable cities, reduce environmental risk factors and create more value-added jobs, investments in infrastructure such as roads, sewage, water systems and in information technologies, are needed.
Public-private partnerships (PPPs) could facilitate the implementation of large infrastructure projects and further reduce the cost of such investments. However, if adequate institutional and human capacities are not in place, PPPs could instead drive the cost of such investments up.
Financing African cities will come from various sources. The private sector is playing an increasingly important role in financing infrastructure development, although public investment accounts for two-thirds of the total in developing countries.
Innovative business solutions, such as digital technologies for mobile payment systems, can offer opportunities to address the growing issue of the urban informal economy.
This 2017 edition of the EMnet Latin America Policy Note provides insights and suggested policy recommendations from the private sector on ways to enhance trade relations and new investment partnerships, as well as how to support a transition to higher-value goods and services. It gives an overview of economic and business trends in Latin America, highlights public policy efforts to promote trade and investment, and offers private sector insights on opportunities and bottlenecks in areas such as infrastructure, innovation and skills. The analysis builds on discussions at the OECD Emerging Markets Network (EMnet) meetings on doing business in Latin America, held on 3 June 2016 in Paris, France, and in Cartagena de Indias, Colombia, on 27 October 2016 as well as on the analysis of the Latin American Economic Outlook 2016, in addition to desk research and bilateral discussions with EMnet members.
Key messages include:
Investors view the progress of the Pacific Alliance regional initiative as positive in opening up investment opportunities in member countries and see the developments of the EU-Mercosur Free Trade Agreement under negotiation as encouraging.
Transport and logistics costs remain too high in the region, due to factors such as poor infrastructure quality and administrative delays. Infrastructure investment is needed to support further regional trade integration.
Greater investment in research and development (R&D) and innovation can support productivity improvements and the development of high-value products and services.
The resource and commodity sectors still offer possibilities. Firms see opportunities in specific sub-sectors with greater value added, such as lithium mining or organic food products.
Skills improvements are needed to support the necessary upgrading and diversification of industries. Improvements in education-industry linkages and greater vocational training can be particularly relevant and supportive.
Finally, despite the economic downturn and political instability, investors remain confident in Brazil as a long-term investment destination.
2017 edition of the EMnet Asia Policy Note. Regional economic integration progressed rapidly in 2015 and 2016 in Asia, with important consequences for future trade and development. This note provides insights and suggested policy recommendations from the business sector on the trade and investment implications of enhanced economic integration in Asia. The analysis builds on discussions at the OECD Emerging Markets Network (EMnet) meeting on doing business in Asia, “Expanding Business through Regional Integration”, held on 8 March 2016 at the OECD headquarters in Paris as well as on the analysis of the Economic Outlook for Southeast Asia, China and India, in addition to desk research and bilateral discussions with EMnet members.
Key messages include:
Strengthening regional ties can play a key role in sustaining growth and build new opportunities for trade, investment and development, provided that adequate reforms are implemented to enhance the investment climate, improve the quality of infrastructure, increase talent retention and foster more linkages with small- and medium-sized enterprises (SMEs).
The “interim period” in which regional trade agreements are still being negotiated or have yet to be ratified produces some uncertainty for businesses. In the meantime, bilateral agreements are instrumental to promote regional trade.
Firms see wide development gaps amongst countries, persistent non-tariff barriers and restrictive policies in the services sector as key challenges to further integration and development.
Despite some progress, local companies should be doing more to capture higher parts of global value chains (GVCs), by producing more value-added products and using acquisitions to upgrade brand names and technology.
Financially viable projects are crucial to channelling capital into infrastructure investments, while financial markets need to be further developed to support this aim.
On the energy front, the region is expected to shift further to renewables, as their competitiveness improves and favourable government policies are implemented.
The Chinese slowdown provides both opportunities and challenges for the region, and companies can take advantage of this. In particular, China’s transition is an opportunity to procure low-cost commodities and further support domestic-led growth.
The 2017 Policy Note on Green Investment provides insights and policy recommendations from the private sector on the business implications of the Paris Agreement at the 21st Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) in December 2015. The analysis builds on the “Greening of the Economy’’ Working Group held on 7 March 2016 at the headquarters of the Organisation for Economic Co-operation and Development (OECD) in Paris and organised by the OECD Emerging Markets Network (EMnet), in addition to desk research and bilateral discussions with EMnet members.
Key messages include:
Strong commitments from the private sector ahead of COP21 contributed to the positive outcome of the Paris Agreement on climate change. While the share of renewable energy will increase in the future, fossil fuels (e.g. coal, gas and oil) will still play a key role, particularly in emerging markets.
Given the changes needed in the future energy mix to achieve the Paris Agreement, policy makers need support the development of renewable energy, promote energy efficiency, reduce fossil-fuel subsidies and make their use more sustainable. These approaches must consider the specific contexts and needs of developing countries.
In addition to promoting core climate policies, governments must also tackle policy misalignments that can hinder green investment. Conflicting incentives in competition, trade, tax and innovation policies, for example, can inadvertently discourage cleaner and more efficient investment.
Strong public-policy commitments, economic and political stability, and a favourable investment climate are critical elements to drive further green investment in emerging markets.
Corporate strategies will need to be adjusted to reflect the post-COP21 scenario. Governments need to choose incentives carefully to encourage the adoption of new and innovative low-carbon technologies.
In emerging economies, tenders and competitive auctions are used increasingly over feed-in tariffs to support early deployment of renewable-based electricity.