Globalization Advisory

Enhancing Effectiveness of Investment Promotion - Strategies for Developing Economies

Dr. Pradeep K. Mukherji

As the world economies accelerate towards increasing the contribution of the services sector in their GDP, access to Capital is no longer the only criteria for increasing competitiveness of a nation. Given this scenario, a number of developing nations, which were traditionally engaging in performing low value-added activities like agriculture or low end manufacturing, have started demonstrating that they can also compete in knowledge intensive activities such as software development, business process outsourcing, biotechnology or R&D etc, with right strategies and focus.
The services economy now contributes to over 63% of world GDP and over 75% of GDP in developed countries. This has consistently increased over last three to four decades. The movement towards the knowledge economy presents newer opportunities for the developing countries, where the services sector still accounts for less than 50% of the GDP. The developing economies need to focus on skill development initiatives and policy action to accelerate the investment promotion activities to generate employment and attract foreign investments.