An Understanding of the Global Investment Climate

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Panelists discuss issues at an event at CSIS
Deputy Assistant Secretary Lisa Kubiske and representatives from the Center for Strategic and International Studies, Heritage Foundation, and National Association of Manufacturers discuss steps that can be made to improve investment climates abroad.

An Understanding of the Global Investment Climate

On June 29th the State Department released the 2017 Investment Climate Statements. To mark the event, I spoke at an event organized by the Center for Strategic and International Studies (CSIS) along with James Roberts of the Heritage Foundation and Linda Dempsey of the National Association for Manufacturers.  We discussed trends in foreign investment, drawing on analysis in the statements to identify key barriers to investment facing American businesses and investors, as well as important progress that governments around the globe have made to attract additional investment.

The “ICS” reports – as they are known within the State Department – are prepared by more than 170 U.S. diplomatic posts around the world, and provide individual assessments of the investment climate in foreign economies. These reports are part of the Economic Bureau’s efforts to share our insights into the challenges and opportunities faced by U.S. investors abroad.

As an example, the 2017 report for Kenya highlights the Kenyan government’s improvements to business registration procedures and progress in giving businesses greater access to electricity – both of which help entrepreneurs and owners of small and medium-sized businesses. In Rangoon, Burma (or Yangon, Myanmar), the report notes recently passed legislation which should increase transparency in investment procedures and regulations affecting foreign investors. Cote d’Ivoire is an example of a country that has introduced a new one-stop-shop for business registration, while Peru has made it easier to form public-private partnerships.  These are the types of reforms that improve conditions on the ground for private sector-led economic growth, and promote opportunities for U.S. business. 

Deputy Assistant Secretary Lisa Kubiske highlights the importance of our Investment Climate Statements to the Department of State's economic mission.

At the same time, challenges remain.  Many economies have created barriers that unfairly limit the scope of foreign investment.  These include limitations on foreign ownership, restrictions on cross border data flows, insufficient protection of intellectual property rights, and problems with corruption.  In an informal survey, State Department economic officers in our posts abroad cited corruption and opaque regulatory environments as primary concerns for foreign investors. Other barriers to investment cited include weak contract enforcement and poor infrastructure.

At the recent Conference for Prosperity and Security in Central America, Secretary Tillerson urged the governments of the Northern Triangle countries – El Salvador, Guatemala, and Honduras – to continue their efforts to create a positive climate for private investment, and to listen to recommendations made by the private sector during any reform process. The Secretary said that “additional steps to end corruption, minimize red tape, reform the tax codes, and streamline import/export systems and customs procedures” were vital.  

Secretary Tillerson’s recommendations echoed what the 2017 ICS reports identified as key areas where reforms could help boost competitiveness, attract new investors, and support sustainable growth. Along with private sector companies, international financial institutions, and host governments, we can help identify policies needed to foster a business climate where businesses – whether U.S. or locally based – can thrive. 

About the Author: Lisa Kubiske serves as the Deputy Assistant Secretary of State for International Finance and Development at the U.S. Department of State. 

Editor's Note: This entry is also published on Medium.com/StateDept.