FOREIGN DIRECT investment inflows to Jamaica declined by US$235 million in 2002, over the year prior, a reflection of the global average downturn for such flows, according to the United Nations Development Programme (UNDP).
The UNDP has also revealed that FDI flows globally have plummeted to the lowest level since 1998; regionally the flows are at a 36 year low.
Bartholomew Nyarko-Mensah, Deputy Resident Representative of the United Nations Development Programme (UNDP), made the disclosures while speaking at the launch of the 2003 World Investment Report in Kingston.
GLOBAL AVERAGE DECLINE
Jamaica's FDI was recorded at US$614 million in 2001, but slipped 22 per cent to US$479 million last year, according to UNDP figures. But the island's performance though "roughly mirroring the global average decline", was still better than some sections of the Caribbean and Latin America, said Mr. Nyarko-Mensah.
As a whole, the region saw a roughly a third dip in foreign flows, which at its estimated $56 billion, was the lowest since 1966, said a UNDP release.
Mr. Nyarko-Mensah attributed the decline to "the uncertain global arena, slower than expected economic growth in several countries, falling stock market valuations, dim prospects for recovery, and insecurity in both economic and socio-political contexts."
The world report, he said, focuses on this downturn, its reasons and the role that national policies and international investment agreements can play in attracting and sustaining FDI flows.
DIM PICTURE
"Against this dim picture, I will venture to say that Jamaica has been able to perform significantly well above its potential," he said.
Noting that Jamaica is ranked at No. 78 according to the FDI potential index, Mr. Nyarko-Mensah said the island "out-performs many other countries, ranking 23rd on the FDI performance index and consolidating its fifth straight year of gain on this particular index."
The global outlook for 2003, Mr. Nyarko-Mensah said, remains dim although there are predictions of improvements in FDI flows thereafter, while official development assistance has also been steadily declining over the years.
SIGNIFICANT IMPACT
Predicting that such declines will have significant impact on any country's ability to finance its development programmes, both private and public, Mr. Nyarko-Mensah said "while it is important for countries to institute measures to increase external financing flows, it is equally crucial that domestic sources of financing are expanded, if vulnerability to external shocks is to be mitigated".
For the region, Mr. Nyarko-Mensah said, the initiatives undertaken under the auspices of CARICOM and its organs, including the Region Negotiating Machinery (RNM), must be intensified if the Caribbean is to become a more attractive trading partner and investment destination in a globalised world economic system.
"The process of establishing a Caribbean Single Market & Economy and the region's ongoing negotiations in various fora including WTO, FTAA and ACP should be strategically approached to offer the greatest benefits to the countries from a development perspective."
The UNDP official pointed to the world report's identification of the need for more effective national policy formulation and implementation to ensure that once a country succeeds in attracting foreign investors, the FDI would bring more benefits and development.
CRIMINAL ACTIVITIES
"Criminal activities, an unskilled labour force and civil and political unrest are deterrents to investment in any environment and could derail the sustenance of FDI flows, particularly in conditions of declining global flows and increasing competition from other countries," he said.
"The formulation and implementation of policies that facilitate and foster development in all segments of the society, reduce poverty, enhance civic dialogue and good governance, will provide an even more conducive climate for increasing FDI flows into Jamaica."
