It is my pleasure to address the Annual Investment Meeting in this new virtual format this year to discuss important trends for the investment ‚Äď development community.
COVID-19 has brought the length of supply chains and their resilience to the fore, but a trend towards reshoring was already well underway before the crisis.
Over the past decade, flows of cross-border investment in physical productive assets has slowed to a trickle, the growth of trade has slowed down, and the growth in global value chains has stopped.
We at UNCTAD expect that these trends will lead to shorter, less fragmented value chains and a higher geographical concentration of value added, primarily affecting higher-technology intensive industries.
We also expect increased reliance on supply chain digitalization to also cause value chains to be more loosely governed, platform-based and asset-light, making value capture in host countries more difficult going forward.
A major concern for developing countries in particular will be that access to and upgrading along the GVC development ladder becomes ever more difficult in this scenario.
Regional economic cooperation, industrial policy and investment promotion will therefore become even more indispensable for building regional value chains for the new normal we face beyond the pandemic.
The transformation of international production will bring both challenges and opportunities for investment. Confronting the challenges and capturing the opportunities requires a change in the investment-development paradigm.
From a focus on export-oriented efficiency-seeking investment in narrowly specialized GVC segments, countries will need to move towards broader investment in production for regional markets, and more investment in a broader industrial base. From cost-based competition for single-location investors, countries will be increasingly in competition for diversified investments based on flexibility and resilience.
Going forward, the international production system will continue to play an important role in economic growth and development, but governments and business need to quickly adapt to the changing environment for investment.
Meetings like the Annual Investment Meeting organized by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister of the UAE and Ruler of Dubai, must continue to help set the pace when it comes to meeting these new challenges and charting a way forward for the investment-development community as a whole.
I thank you for your kind invitation to again address this forum, and I hope that your deliberations this year will help push forward the changes we need to confront head-on the new normal beyond the pandemic.