The Policy Framework for Investment

What is the PFI?

The Policy Framework for Investment (PFI) is the most comprehensive and systematic approach for improving investment conditions ever developed. It covers ten policy areas and addresses some 82 questions to governments to help them design and implement policy reform to create a truly attractive, robust and competitive environment for domestic and foreign investment.

The ten policy areas are widely recognised, including in the Monterrey Consensus, as underpinning a healthy environment for all investors, from small- and medium-sized firms to multinational enterprises.

Policy areas

• Investment
• Investment promotion
  and facilitation
• Trade
• Competition
• Tax
• Corporate governance
• Responsible business conduct
• Human resources development
• Infrastructure and financial sector development
• Public governance

The PFI is neither prescriptive nor binding. It emphasises the fundamental principles of rule of law, transparency, non-discrimination and the protection of property rights but leaves for the country concerned the choice of policies, based on its economic circumstances and institutional capabilities. One size does not fit all.

Although addressed to governments, the PFI needs to be seen in the broader context of other converging international initiatives to improve the investment climate, including the OECD Guidelines for Multinational Enterprises.

Who are the potential users?

With its broad horizontal approach, the PFI can assist governments engaged in domestic reform, regional co-operation or international policy dialogue on investment. It can also serve as a reference point for investment promotion agencies, donors as they assist recipient country partners in improving the investment climate, and businesses, trade unions, and NGOs in their dialogue with governments.

Developed by a task force representing some 60 economies, as well as business, labour, civil society and international organisations, the PFI is a flexible instrument that governments can adapt to their specific circumstances, objectives and needs while at the same time providing a common platform for dialogue and peer learning. The flexibility is evident in the variety of ways governments are already using the PFI:

• Recent OECD Investment Policy Reviews of Egypt, Peru and Vietnam have been structured along the lines of the PFI.
• The Investment Reform Index (IRI) of the Investment Compact for Southeast Europe applies the PFI to measure and communicate progress on investment climate policy reforms.
• Under the MENA-OECD investment programme, participating countries will develop and implement a comparative benchmark measuring the process of investment policy reform based on the PFI.
• The NEPAD-OECD Africa Investment Initiative uses the PFI and has explored options for introducing a PFI-like investment dimension in the African Peer Review Mechanism.
• Vietnam carried out a detailed self-assessment in 2006 using selected chapters of the PFI and has followed up with a more complete and detailed PFI-based assessment of its investment policies. Other Asian APEC members are considering following suit.
• Latin American countries have expressed strong interest in launching a regional capacity building initiative based on the PFI. Chile co-chaired the work on the development of the PFI. Costa Rica, and Mexico intend to use the PFI to conduct self-assessments at sub-national level.

How can the PFI be implemented?

To assist governments in implementing the PFI, a PFI User’s Toolkit is being developed which offers further guidance on how to address each question and on how to structure a PFI review.

• Text of the Policy Framework for Investment
  [ Chinese / English / French / Polish / Spanish ]
• Policy Framework for Investment: A Review of Good Practices
  [ English / French ]
• Policy Brief on the Policy Framework for Investment [ English / French ]