Policy challenges

In order to realize development benefits from FDI in natural resources exploitation, governments must secure economic benefits to themselves and to local populations while ensuring that ESG issues are addressed. With regard to FDI this involves striking a delicate balance between creating the right investment climate that attracts the desired investment and offers appropriate protection to investors on the one hand and ensuring inclusive and sustainable development benefits to host countries on the other hand. Once investments are secured, countries face the threefold economic challenge of determining: (1) how to add value to extractive activities, (2) how to capture that value locally, and (3) how to make the best use of the revenues generated to bring about development benefits (UNCTAD, 2007).

Related Subject(s): International Trade and Finance