Al-Ahram Weekly | Economy

		3 - 9 October 2002 Issue No. 606 Economy	Current issue Previous issue Site map
Published in Cairo by AL-AHRAM established in 1875		Recommend this page

ESCWA: Region needs transport coordination

LAST week, the United Nations' Economic and Social Commission for Western Asia (ESCWA) met in Cairo to discuss regional cooperation in the area of transportation.
ESCWA is composed of 13 member countries: Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, the Syrian Arab Republic, the United Arab Emirates and Yemen.
During the three-day conference, Mariam El-Awadi, ESCWA deputy executive secretary, said that the meeting aimed to develop a comprehensive transportation system in an attempt to boost trade among member countries.
Hamdi El-Shayeb, Egypt's minister of transportation, said that the ESCWA region has the legal agreements necessary to facilitate the development of a comprehensive transportation system. He added that there are many inter-state bilateral agreements in place to help facilitate cooperation in maritime, airline and railway transportation.
Indeed, experts have pointed to the international roads agreement, signed by 10 ESCWA members in Beirut in 2001, as one of the most important achievements made in the field of regional transport cooperation.
Additionally, the Egyptian Ministry of Transportation has presented a memo suggesting the development of maritime cooperation among member countries. It stressed the establishment of an East-West Arab maritime line.
However, at the top of the agenda was the need to create national committees to facilitate trade, transportation and communication among ESCWA member states.
Bartercard in Egypt

A NEW trade exchange facility has recently been launched in Egypt. "Bartercard Egypt, the latest addition to Bartercard International, was founded in June 2002 with the aim of helping overcome the Egyptian economy's recent cash squeeze," said Amr Hosni, Managing Director of Bartercard Egypt.
Bartercard facilitates business-to-business transactions electronically via the Internet, telephone e-commerce, and transaction vouchers (similar to those of credit cards). Its philosophy is based on offering trade opportunities while maintaining cashflows. "Participants can exchange equipment of the same value as a given product or service. This helps maximise profit margins," said Hosni. He added that Bartercard Egypt will focus its efforts mainly on small and medium sized businesses.
The system, first established in Australia in 1992, now boasts more than $1 billion in annual trade turnover through its 109 worldwide offices. Members of Bartercard can choose products and services from a pool of industry categories including community services, wholesale, retail, agriculture, manufacturing, construction, transportation, trade and medical services, among others.
UNCTAD: Global FDI drops

FOREIGN direct investment (FDI) worldwide fell by more than half last year, the largest drop in 30 years, the United Nations Conference on Trade and Development's (UNCTAD) secretary-general, Rubens Ricupero, recently said.
Ricupero's comments highlight the findings of the "World Investment Report 2002: transnational corporations and export competitiveness", released last week by UNCTAD. According to the report, FDI inflows in 2001 declined to $735 billion. It attributed this decline to the slowdown in the world economy and a weakening of business confidence, made worse by the events of 11 September. These same reasons also contributed to a sharp reduction in cross-border mergers and acquisitions.
While all regions suffered in 2001, some were hit worse than others. The drop in FDI was concentrated in developed countries, where it declined by 59 per cent. FDI flows to developing countries declined by 14 per cent from $238 billion to $205 billion.
This year's report introduces two new FDI benchmarking tools: The Inward FDI Performance Index and the Inward FDI Potential Index. These measure a country's performance by "standardising" inflows with the size of its economy, and measuring potential by using a set of social, political, institutional and economic factors of importance to foreign investors. The two indices show how countries are performing relative to their potential. On this index, Africa's score fell from 0.8 during 1988- 90 to 0.5 during 1998-2000 suggesting a loss in its relative attractiveness, in spite of its low share of global GDP. Egypt, in particular, fell from 21 to 91 position. In the developed world, the EU reported the highest score of 1.7, while Japan scored lowest with 0.1. Asia, as a whole, fell from 1.1 to 0.9. The report also highlights the role of Transnational Corporations (TNCs) in boosting exports to a number of countries. While this factor is encouraging more countries to target export-oriented FDI, the report says that "exports must be upgraded and involve local value added if this investment is to yield longer-term development gains." It also suggests that countries wishing to target export-oriented FDI should analyse existing trade and industry patterns, consult existing investors and look at competing locations. The report stresses that "enhanced export competitiveness should be seen as a means to an end: development". Thus it warns that, should many countries seek to corner the same product market, "a supply glut may result and prices will collapse".
Additionally, it cautioned that "intense competition for export-oriented FDI may translate into a race to the bottom in social and environmental standards, and a race to the top in incentives." Sustained competitiveness requires continuous upgrading towards higher value-added activities. "On their own, and in the absence of an adequate policy environment, TNCs may not undertake such upgrading." To overcome this, the report suggested that incentives to investors should be complemented by "broader efforts to strengthen a location's endowments of skills and technological capabilities and to promote linkages between exporting foreign affiliates and domestic suppliers."

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