UNCTAD: Special Issue of its Investment Policy Monitor on the promotion of investment in the digital economy.
The digital economy – the application of internet-based digital technologies to the production and trade of goods and services – is becoming an ever more important part of the global economy. In many countries, this is reflected in digital development strategies and investment promotion priorities.
For the World Investment Report 2017 on Investment and the Digital Economy, UNCTAD examined to what extent digital development strategies address financing needs. It also conducted a survey of investment promotion agencies (IPAs) on investment promotion and the digital economy.
This Special Issue of the Investment Policy Monitor presents the findings of these two studies. Key findings include:
* The development of the digital economy is a key objective for almost all countries. Many countries and economies have adopted digital development strategies. An UNCTAD survey of the investment dimension in more than 100 digital development strategies shows that almost all such strategies acknowledge the need for investment.
* However, hardly any strategy contains a specific 'investment chapter'; most strategies discuss investment needs only at a general level. Less than 25 per cent contain details on investment requirements for infrastructure, and less than 5 per cent on investment needs beyond infrastructure, including for the development of digital industries.
* Policy measures to promote investment proposed in digital development strategies tend to focus on improving the enabling (sectoral) regulatory framework. Other measures include incentives and general facilitation, digital standards, and clusters and incubators for digital business development.
* Less than half of digital development strategies explicitly consider foreign investment as a source of finance. Investment promotion agencies mostly do not feature in the plans.
* Responses to a separate UNCTAD global survey of IPAs confirm that they are generally not involved in the formulation of digital strategies. Nevertheless, for most IPAs, the promotion of investment in digital infrastructure, digital firms, and the development of linkages in the digital sector, are priority objectives.
* However, while incentives and facilitation measures are frequently proposed in digital development strategies, only a minority of IPAs confirms the availability of investment promotion instruments for the digital economy.
* The results of the two surveys suggest that policy coordination, between investment authorities on the one hand and ministries and public institutions charged with digital development on the other, can be improved.
Considering the pressing need to increase investment in digital infrastructure and businesses, policymakers in charge of investment, on the one hand, and digital development, on the other, should work synergistically. The forthcoming World Investment Report 2017, on Investment and the Digital Economy, will provide policy recommendations on how to strengthen the investment dimension in digital development strategies.
For more details on these and other findings I invite you to download the Special Issue of the Investment Policy Monitor here