The UNCTAD has published the World Investment Report 2018, a report published annually since 1991, covering the latest trends in foreign direct investment around the world. The World Investment Report 2018 aims to provide a better understanding of the interaction between new industrial policies and investment policies and illustrates how investment policy instruments are used differently across various models and suggests ways to improve the impact of industrial policy through more effective and efficient investment policies. The World Investment Report traditionally offers recommendations to update existing investment policy instruments.

In its preface, the World Investment Report 2018 points out that we are at the dawn of a fourth industrial revolution. Since new technologies and robotization advances make our production better, cheaper and faster, this new industrial revolution offers enormous opportunities for economic growth and sustainable development. However, accelerating pace of technological innovation could also result in serious economic disruption and more inequality. In this context, developing countries, and least developed countries in particular, face considerable challenges. To confront an altering global economic landscape, deep structural reconfiguration is required. Thus, governments around the globe should facilitate a transition towards new sectors and activities with higher productivity and to develop new more complex and intertwined industrial policies. The UNCTAD concludes that central to these is foreign investment. The current debate is less about whether governments should intervene, but rather how.

As regards investment trends, UNCTAD’s findings reveal 23% drop in global foreign investment flows to $1.43 trillion. In particular:
• FDI flows to Africa continued to slide, reaching $42 billion, down 21% from 2016;
• FDI flows to developing Asia remained stable, at $476 billion;
• FDI to Latin America and the Caribbean rose 8% to reach $151 billion;
• FDI flows to the least developed countries fell by 17%, to $26 billion;
• FDI flows to developed economies fell sharply, by 37%, to $712 billion;
• FDI flows to transition economies declined by 27%, to $47 billion.

As regards policy efforts aimed at attracting FDI, in 2017, 65 countries and economies adopted at least 126 investment policy measures, of which 84% were favourable to investors. These policies have liberalized number of industries including transport, energy and manufacturing.

Nonetheless, UNCTAD’s data reveal that an increasing number of countries have taken a more critical stance towards foreign investment. Investment restrictions and regulations were driven mainly by concerns about national security and foreign ownership of land and natural resources. In addition, several countries including the European Union are considering tightening investment screening procedures. It is worth mentioning that the number of new international investment agreements (IIA) concluded in 2017 (18) was the lowest since 1983 and the number of effective treaty terminations outpaced the number of new IIAs.

In addition, UNCTAD finds that an increasing number of countries tend to modernise their old-generation international investment agreements. International investment agreements reforms have been identified in all regions. Over 150 countries have taken steps to formulate a new generation of sustainable development-oriented IIAs. As regards investor-State dispute settlement (ISDS), the number of new ISDS claims remains high; at least 65 new treaty-based ISDS cases were initiated in 2017.

As regards new industrial policy, the UNCTAD’s survey shows that over the past 10 years, at least 101 economies across the developed and developing world have adopted formal industrial development strategies.

In the context of the fourth industrial revolution, strategic review of investment policies for industrial development is required. It is understood that modern industrial policies can contribute to a sustainable development strategy, however, policymakers have to enhance their coherence and synergy with national and international policies including social and environmental policies. States should avoid overregulation and to cautiously balance the role of the market and the state. Thus, UNCTAD encourages countries to adopt a collaborative approach, opened to international productive- capacity cooperation.

UNCTAD’s projections for global FDI in 2018 show fragile growth. Global flows will remain well below the average over the past 10 years.