World investment report 2011-UNCTAD

19th aug hindu edits

·         Focus area: international production and commerce

·         Cross border non equity modes include contract famring, manufacturign , outsourcing etc

·         It is a mechanism that allows MNCs to coordinate activities in their global value chains without acquiring equity stakes in NEM firms

·         NEMs generated 2 tr $ in 2010

·         They have acquired significant presence especially India eveloping countries depsite the FDIcaps

·         NEMs facilitate MNCs tot ap into productive capacities of the region

o   Example: the software and IT industry of India

·         Now NEMs firms are transforming into MNCs in the process of servicing their clients  present world wide

POSITIVES

·         They contribute to as high as 15% of GDP in some countries

·         Create enormous job opportunities

·         Boost entrepnuerial skills and exports

NEGATIVES

·         Poor working conditions especially in developing countries

·         Sacrifice safety and environment norms for short term profits

WAY AHEAD

·         Developing coutnries need to be wary fo risk in promoting low value activities

·         They must focus on maximising benefits form integrating domestic firms into global value chains