1 Monterrey Consensus on Financing for Development UN, February 15, 2008 Molly Pollack, Executive Director, ChileGlobal

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Monterrey Consensus on Financing for Development

UN, February 15, 2008Molly Pollack, Executive Director, ChileGlobal

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Challenges / Goals of Monterrey Consensus

• Goals: Eradicate poverty /Sustained economic growth/ inclusive global

economic system• How: Movilizing and increasing use of

financial resources through– New partnership /developed and developing

countries– Collaboration among all stakeholders– Each country responsible for its economic and

social development: important role of national policies


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And…

• Regional partnerships

• Financing for development should be:– Sustainable– Gender-sensitive– Development focused on people


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What has happened since the MC

• Improvement in macroeconomic and fiscal policies

• Increase in flow of private resources to developing countries, although may not be sustainable .

• International trade has recovered, but new forms of proteccionism emerged

• Official Development Assistance changed its negative trend

• Debt indicators have improved


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Critical comments on the Monterrey Consensus

• Growing power of transnational short-term capital flows instead of promoting long term investments

• The opening of markets could widen gap between rich and poor countries

• Underdeveloped countries have to compete on the global market with wealthy economies that can afford protectionism policies and subsidise their products

• Focus on “human development” is needed• Mechanisms to promote investments in low-income

countries should be implemented.


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Mobilizing international resources for development: FDI and other private flows

• Why FDI is good?

• Help to accelerate transfer of knowledge and technology

• Increase employment generation• Boost overall productivity• Enhance competitiveness and

entrepreneurship• As a result: poverty reduction and economic

growth


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What should stakeholders do?

»Countries• Improve investment climate (business friendly

environment)• Focus on human capital development • Promote public/ private partnerships

» International institutions• Increase support to infrastructure development• Support VC and other lending instruments, export

credits, etc.• Facilitate business contacts• Support public/ private initiatives


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What should business sector do?

• Business should be more socially responsible

– Social and gender sensitive gender– Consider environmental implications of their

undertakings (business culture)– Be transparent, reliable– Respect rules– More willing to networking


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Developments since Monterrey

• Insufficient political will slowed down the required reforms

• Current international economic conditions present the spectre of deflation, volatility in capital markets and exchange rates

• Large and increasing imbalances in the United States economy, and fluctuations in oil prices

• The Global Microcredit Summit’s goal of reaching 100 million poorest families.


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LAC after Monterrey

• Source: ECLA, on the basis of official figures as of April 2007


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Developments since Monterrey (2)

• Opening up to FDI and improved regulatory frameworks have not led to the magnitude of FDI inflows expected

• Still information on stocks of external assets and debt is especially limited.

• Some countries have not implemented parts of their macroeconomic and structural reform programmes


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LAC after Monterrey

• Source: ECLA, on the basis of official figures as of April 2007


13• Source: ECLA, on the basis of official figures as of April 2007

LAC after Monterrey


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LAC after Monterrey

LATIN AMERICA AND THE CARIBBEAN: COUNTRY DISTRIBUTION OF FDI FLOWS,

BY RANGE, IN 2006:

• Source: UNCTAD, FDI/TNC database


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Total Factor Productivity Comparison by World Region


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Chile after Monterrey

• Introduction of MK1 and MK2 reforms that allowed the complete integration of the domestic stock exchange with the international market and facilitated the development of the Venture Capital Industry

• CORFO and ProChile become crucial in promoting Chilean exports and investments in Chile

• Chile’s attempts to join Financial Action Task Force (FATF)


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Chile After Monterrey

Country agenda coincides with the Consensus

Consensus goalEradicate poverty, achieve sustained economic growth and promote sustainable development as we advance to a fully inclusive and equitable economic system.

The Four Pillars of the Bachelet Government for Development1. Pension Plan Program Reform for All Workers2. Education Improvement3. Strengthening Innovation & Entrepreneurship – A Knowledge

Economy4. Better Infrastructure & Housing for All


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Innovation as a Key Issue for Development: Public-Private Partnership as the Means

– Creation of a National Council on Innovation for Competitiveness• Supra-ministerial

– Coordinates: Inter-ministerial – inter-agency

• Includes a select group of the highest representatives of the public, scientific, academia, and private sector.

• Mandate to develop a country innovation strategy beyond government

• Creative financing: Mining Royalty Fund• Key Cluster Agenda

– working with Chile’s competitive advantages


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Public-Private Partnerships for InnovationHow do we do it?

Fundación Chile Non-profit, privately owned corporation, created in

1976 by an agreement between the Chilean Government and ITT Corporation (USA). In 2005 BHP Billiton became a co founder.

Mission To increase the competitiveness of human resources

and productive sectors and services, by promoting and developing high impact innovations, technology transfer and management for the country.


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Working with Chile’s Key Sectors

Sectors

•Marine Resources•Agribusiness•Forestry•Human Capital•Environment•ICTs

Technologies

•Biotechnology•Environmental Technologies•Fine chemistry•ICTs•Financial engineering•Food technology


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The Outcome


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Measuring Impact: Developing Clusters

Fundación Chile Model = Innovation + Difussion Salmon Program

Industry ProductionYear Tons1983 3472005 383.000

US$ 1.725 M in exports for 2005 20,2% of Chile’s total food exports +35.000 direct and indirect jobs created

Source: (Informe Económico Salmonicultura 2005, SalmonChile)


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Exporting the Fundación Chile Model to Region

Mexico– Fundación Jalisco– Fundación Sonora

Peru– Fundación Perú

…networks + public-private partnerships + competitive advantages


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Networks+Public-Partnerships+Diasporas

• Expatriates played a crucial role in the acceleration of technological change, business creation and investment capital in countries such as Scotland, India, Taiwan, Ireland, Israel, China and others. – Pioneer investors – Helped attract foreign investment to countries of origin at times when

their nations were considered risky– Constitute bridges between residence and home countries for:

• Market connections• Technological transfer • Coaching of local business • Internationalization of local firms

• The acceleration of economic growth and development in Latin America requires a boost in its innovative capacity and an upgrade of the stock of qualified human resources of the region.

• An important pool of talent and human capital of the region is outside its national borders and is constituted by business Diasporas.


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Diaspora for Development:A Public-Private Partnership - ChileGlobal


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What is ChileGlobal?

An active international network of

Chilean business owners and high level

executives

· and those with an affinity for Chile ·

who are interested in contributing and

sharing the success of the Chilean

economy


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Objectives

• To help incorporate the country to the knowledge economy

• To create and promote a mechanism of technology transfer and knowledge exchange, in order to increase network opportunities, access international advice and knowledge for the benefit of Chile while accelerating innovation


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Sectoral Insertion of Members


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Developing an Investment Network

• A network that reaches the entire innovation chain from idea to business– Investing time, contacts, knowledge, and resources


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Spreading the Model: A Proposition for Multilateral Agencies and countries

• Creation of regional talent investment network– Private-public partnership– Innovation-based– Sector focused


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Conclusions and recommendations

• The Monterrey Consensus has played a fundamental role in the orientation of strategies and policies in the global context and part of the goals have been achieved

• The rapidly changing conditions and the experiences obtained make necessary to take these facts into consideration

• Multilateral organizations should promote and support new strategies and successful programs in a massive and regional manner


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Recommendations

• Next steps should be more micro than macro

– Focus on quality rather than in quantity (foreign investment)

– Learn from successful experiences (role of highly skilled diasporas)

– Promote actively public-private partnership, using role models (Fundacion Chile)

– Support strategies for entrepreneurship (VC)– Promote and support successful programs to

incentive entrepreneuship– Promote and support regional networks (ChileGlobal)

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Thank youwww.chileglobal.org

Documents

1 Monterrey Consensus on Financing for Development UN, February 15, 2008 Molly Pollack, Executive Director, ChileGlobal