Dear WAIPA Members and colleagues,
It is an honour for me to address you as the President of this fine institution. This was a responsibility entrusted upon me, not one I actively sought. It is my hope nonetheless that I shall correspond to your vote of confidence. At ISPAT – Invest In Turkey – we are all appreciative of the support shown by fellow Steering Committee members.
They have acted decisively and taken the decisions needed to safeguard this organisation, building on the work of those who came before us. The presidency shall only be as strong as the organisation itself. Steering Committee members and I have taken stock of our shortcomings, and remain committed to taking WAIPA forward. I wish therefore to also thank my predecessor, Alessandro Teixeira of Apex-Brasil, and express my appreciation to the former Steering Committee that supported his service. They have led WAIPA through an unprecedented period of economic uncertainty. This made their contribution to FDI promotion ever more valuable. Aside of their dedication to WAIPA, they needed to steer their own IPAs through the great recession that ensued from a near collapse in financial markets.
What a daunting task for all of us involved in promoting our countries and regions. IPAs were faced with the sub-prime crisis in the US, and across the Atlantic, the sovereign debt crisis in the EU. Their negative impact on the aggregate of global FDI flows is well known. From a geo-economic standpoint, a new era began to unfold – the implications of which we must still fully come to understand. While in the past financial crises were symptomatic in economies of Asia and Latin America, these are now the world economies’ engines. As western economies reeled from its excesses, economies in South East Asia, Eastern Europe, Africa and Latin America kept up the pace.
Global economic governance has thus since taken centre stage. We have witnessed the emergence of the G-20, the next meeting of which to be hosted by Turkey. Counter-cyclical measures and other policy responses might not have been successfully adopted, had there not been coordination with leading economies which lacked the representation corresponding to their global weight. Emerging economies now account for 40% of global GDP, up 18% from two decades ago. While they have experienced volatility in currency and short-term flows, their overall future prospects remain unchanged. It is important to separate what is a temporary downturn from what are long-lasting structural changes.
As regards global FDI patterns, we have also been witness to a shift in paradigms. Even as statistics often lack the desired accuracy, Greenfield FDI as well as M&A activity now increasingly originate in the ‘developing’ world. Even as portfolio investments decreased, long-term investments last year continued to flow in. A clear turning point was reached in 2013, when roughly 60% of all global FDI went to emerging economies. As a source of FDI, emerging market economies have also grown in importance, from under 5% at the fall of the Berlin Wall in 1989 to approximately 35% today. This increase accelerated after 2008. Emerging markets accounted for 20% of global FDI outflows in 2008. Developed markets’ share of out-flows of FDI have meanwhile declined from 95% in the early 1990s to approximately 65% today. In the context of M&A activity, sources based in emerging markets may well have responded for approximately 56% of all cross-border transactions in 2013. FDI flows into and out of emerging markets and ‘South-South Flows’ are steadily becoming the new norm. And we must begin accepting it as such. With economic growth expected to continue at a faster pace in emerging markets than in advanced economies, this is likely to be less of a temporary trend than it is a changing paradigm, one for which WAIPA is preparing for. Our WAIPA Strategy for 2015 is an attempted response. We have taken stock, we are moving forward.
With appreciation,
Mr. İlker AYCI
President - Republic of Turkey Prime Ministry Investment Support and Promotion Agency
President - WAIPA (World Association of Investment Promotion Agencies)
