It is almost universally accepted today that the private sector is the engine of growth and therefore investment is a key factor in advancing national economies and this has been evidenced by the fact that many poor and developing states have transformed themselves into “economic tigers” through sensible and attractive investment policies. Some notable examples of this economic transformation include China, India, Singapore, Malaysia, South Korea, Brazil etc. All these countries formerly were extremely poor and backward but in a relatively short time transformed themselves through rapid industrialization brought about largely through massive injection of capital by both foreign and local investors.
The most profound effect has been seen in developing countries, where yearly foreign direct investment flows have increased from an average of less than $10 billion in the 1970’s to a yearly average of less than $20 billion in the 1980’s, to explode in the 1990s from $26.7billion in 1990 to $179 billion in 1998 and $208 billion in 1999 and now comprise a large portion of global FDI.. Driven by mergers and acquisitions and internationalization of production in a range of industries, FDI into developed countries last year rose to $636 billion, from $481 billion in 1998 (Source: UNCTAD)
Proponents of foreign investment point out that the exchange of investment flows benefits both the home country (the country from which the investment originates) and the host country (the destination of the investment). Opponents of FDI note that multinational conglomerates are able to wield great power over smaller and weaker economies and can drive out much local competition. The truth lies somewhere in the middle.
For small and medium sized companies, FDI represents an opportunity to become more actively involved in international business activities. In the past 15 years, the classic definition of FDI as noted above has changed considerably. This notion of a change in the classic definition, however, must be kept in the proper context. Very clearly, over 2/3 of direct foreign investment is still made in the form of fixtures, machinery, equipment and buildings. Moreover, larger multinational corporations and conglomerates still make the overwhelming percentage of FDI. But, with the advent of the Internet, the increasing role of technology, loosening of direct investment restrictions in many markets and decreasing communication costs means that newer, non-traditional forms of investment will play an important role in the future. Many governments, especially in industrialized and developed nations, pay very close attention to foreign direct investment because the investment flows into and out of their economies can and does have a significant impact. In the United States, the Bureau of Economic Analysis, a section of the U.S. Department of Commerce, is responsible for collecting economic data about the economy including information about foreign direct investment flows. Monitoring this data is very helpful in trying to determine the impact of such investments on the overall economy, but is especially helpful in evaluating industry segments. State and local governments watch closely because they want to track their foreign investment attraction programmes for successful outcomes.
Here in Guyana, the government has been persistently working towards making the investment climate more favourable and enabling, and it has paid off as in recent years there has been sharp increase in investments from both the local and foreign business communities.
Only recently a large business team from Brazil was here exploring investment opportunities and MOUs on investments were clinched with Iranian and Israeli businesses for mineral exploration and agricultural investments.
Currently several companies are exploring for both offshore and onshore oil and recently CGX, one of the companies involved in oil exploration, obtained some encouraging findings.
And more recently, the Canadian-based U 308 company reported very favourably on uranium exploration, pointing out that South America will become the next uranium development frontier. But notably the company has disclosed: “Our flagship programme is in Guyana.
Vice-president of the company, Ms. Nancy Chan-Palmateer said that South American deposits under the company’s control are promising and a strong geographic presence exists in the prospective regions of Guyana, Colombia and Argentina.
But despite all these and other investments that are taking place here, the prophets of doom among us keep repeating their mantra of gloom and doom for Guyana under the current government. However, the facts and realities tell an opposite story and it is only a matter of time before these pessimists end up in the dust bin of history.