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Building knowledge for trade and development

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altThe Virtual Institute organized two brief study tours on February 23 for 65 Master's students from member universities in Switzerland and Spain.

Thirty (30) students from the International Law and Economics (MILE) programme of the World Trade Institute  of the University of Bern and 35 students from the International Economic Law and Policy (IELPO) programme of the University of Barcelona participated in presentations by UNCTAD experts which exposed them to some of the ideas and initiatives of the organization.

The programme for MILE included a provocative lecture on the lessons learned from the recent financial crisis given by Heiner Flassbeck, of the Division on Globalization and Development Strategies,and an introduction to the work of UNCTAD on International Investment Agreements presented by Hamed El-Kady, of the Division on Investment and Enterprise (DIAE).

Flassbeck stressed how the signals sent by the system were interpreted symmetrically by different financial operators around the world. This, in turn, led to an insufficient aggregate risk diversification and fostered excessive risk-taking behaviour during the prolonged upturn, as indirectly testified by the high correlation of prices of different categories of risky assets. In terms of policy, he recommended the separation between investment banks and saving banks and a substantial increase of the minimum equity requirements.

El-Kady presented a comprehensive overview on the different kinds of International Investment Agreements: Bilateral Investment Treaties, Regional Trade Agreements with specific investment provisions and Multilateral Agreements ratified by the WTO (such as TRIMs and GATS). He also discussed in some detail the international mechanisms which regulate disputes between investors and host countries and the role that UNCTAD could play to strengthen the international legal framework regulating Foreing Direct Investment (FDI).

The program for IELPO included a presentation of the latest Information Economy Report given by Rémi Lang, of the Division on Technology and Logistics, and a briefing on recent trends in FDI flows by Masataka Fujita, of DIAE.

Lang presented recent data on the diffusion of the most important communication technologies, which suggests that the information divide between developed and developing countries is shrinking in terms of mobile telephone communication and Internet access. He also discussed the Indian model to attract Information and Communication Technologies (ICT) outsourcing.

Masatka presented the recent evolution of FDI flows after the financial crisis. Not surprisingly there is a generalized reduction of FDI, more accentuated in developed countries than in developing countries. BRIC economies (especially China) appear the most resilient both on FDI inflows and outflows. He also stressed that the ratio of FDI over gross fixed capital formation is decreasing, suggesting that foreign capital becomes relatively less important in time of crisis.

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