Business Insights on Emerging Markets 2015 provides views from the private sector on investment opportunities and challenges in Asia, Africa and Latin America. It also highlights the dynamic changes in foreign direct investment (FDI) flows to and from developing countries in these regions. This report compiles analysis from discussions at meetings of the OECD Development Centre’s Emerging Markets Network (EMnet) on doing business in Africa, Asia and Latin America as well as through thematic work on green investment in emerging markets. A report by the Emerging Markets Institute at Cornell University complements this analysis with a study of the changing dynamics of global FDI flows and the increasing role played by multinational firms from developing countries in the global economy.
This edition of the EMnet Africa Policy Note identifies opportunities and challenges for the private sector associated with demographic growth, urbanisation and regional integration in Africa. The analysis builds on discussions at the business meeting held on 6 October 2015 at the OECD headquarters in Paris and organised by the OECD Emerging Markets Network (EMnet).
Key messages include:
Africa is experiencing unprecedented demographic growth that is opening up new investment opportunities in sectors outside the traditional extractive industries.
Population growth and urbanisation offer opportunities to develop new products and services tailored to urban dwellers and the middle class.
A growing domestic energy demand is capturing the interest of the multinational companies in Africa; however, the lack of skilled labour and the complexity of land ownership risk slowing down investments.
Limited regional integration presents a major challenge for development and is particularly crucial to promote industrialisation and energy markets.
Quality public policies and a strong commitment from all levels of governments are essential to develop public-private partnerships that can support infrastructure and industrial development.
Clusters, sectoral zones and development of “corridors” can be powerful tools to promote industrialisation and regional integration.
Local expertise is particularly important to develop productive relationships with local governments and gain a better understanding of customers and investors.
This edition of the EMnet Latin America Policy Note provides insights on the role the private sector can play to foster productivity through investment in skills and innovation. Improving productivity in Latin America will require aligning skills with market demand, leveraging foreign direct investment (FDI) to support innovation and expanding infrastructure investments. The note provides an overview of education and skills policies in Latin America, offers business insights on productivity-related challenges and assesses policy makers’ efforts to support productivity improvements. The analysis builds on discussions at the business meeting held on 5 June 2015 at the French Ministries of Economy and Finance in Paris and organised by the OECD Emerging Markets Network (EMnet).
Key messages include:
Productivity improvements generated by investments in skills and innovation are essential to foster resilient long-term economic growth.
Greater dialogue between educational institutions and the private sector is needed to address skills mismatch.
Policies supporting foreign investment in research & development (R&D) are needed to encourage innovation spillovers and drive the growth of knowledge intensive industries.
Education priorities can be further aligned with market demands for competencies such as English language skills.
Facilitating the certification of training schemes developed by the private sector could encourage greater provision of corporate training to fill critical skills gaps.
Developing institutional capacity and regional co-ordination to support investment in infrastructure development is necessary to unlock private capital flows.
Greater use of debt capital markets can scale up finance for infrastructure. Firms are eager to see greater use of project bonds in the region.
This edition of the EMnet Asia Policy Note provides insights and suggested policy recommendations from the business sector on innovation challenges in Asia. The Note gives an overview of the innovation landscape in Asia, offers business insights on innovation-related challenges and assesses policy makers’ efforts to support private sector-led innovation for development. The analysis builds on discussions at the EMnet meeting held on 2 April 2015 at the OECD headquarters in Paris.
Key messages include:
External factors are fuelling uncertainty on economic development in Asia. Innovation through research and development (R&D) can play a central role in increasing domestic productivity levels and support the transition to knowledge-based economies.
Despite the economic downturn, global R&D spending has increased steadily since 2007 with a greater role played by emerging economies, particularly China.
While innovation policy in the region has traditionally been driven by the public sector, governments are expanding public-private partnerships to nurture high-technology zones and develop incubators. Further incentives for private research and development are needed.
Infrastructure, development, particularly IT and telecommunication, public-private partnerships, skills and technology play a critical role in fostering corporate innovation in Asia. Governments need to design policies to support improvements in these areas to create a sound enabling environment for innovation and move manufacturing activities up in global value chains.
Better access to finance is needed, particularly to support early stage development and further investment in innovation.
Motivated by the need to reduce costs and improve profitability, green innovation is driving resource-efficiency improvements.
This edition of the EMnet “Greening of the Economy” Working Group Policy Note provides insights and policy recommendations from the private sector on renewable energy and energy efficiency investment in emerging markets. The analysis builds on discussions at the EMnet Working Group meeting held on 5 October 2015 at the OECD headquarters in Paris.
Key messages include:
With the increasing cost competitiveness of renewables, clean-energy infrastructure projects are becoming more attractive to private investors.
Green growth generates opportunities for investment across a range of areas including clean energy, energy efficiency and pollution reduction. Although the SDGs and the recently adopted COP 21 Paris Agreement showcase country commitments to greener growth, countries still need more stable and ambitious policies to promote it.
The risk of policy changes remains the key challenge for scaling up investment, and companies continue to stress the importance of a predictable and stable policy environment for investment.
Access to finance for small- and medium-sized projects remains a challenge. Creating new tools to pool investments or improve access to capital markets is essential to further expand investment.
Further development of new technologies will deeply influence the pace of the transition to a greener economy. Companies are closely following technological developments and increasing investments in research and development.