Maximizing the decent work contribution of foreign direct investment

The first paragraph of the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (ILO MNE Declaration), through international direct investment, trade and other means, multinational enterprises can “make an important contribution to the promotion of economic and social welfare; to the improvement of living standards and the satisfaction of basic needs; to the creation of employment opportunities, both directly and indirectly; and to the enjoyment of human rights, including freedom of association, throughout the world”.

Multinational enterprises play a key role in innovation, trade, human capital formation, standards, and productivity. They also create demand in their supply chains, generate surpluses that can improve workers’ income and employment conditions, and generate know-how in ways that benefit other enterprises of all sizes. Foreign investors also tend to bring new technology and skills, which have additional economic and social development advantages. Facilitating the local transfer of good managerial and production processes, improving access to technology, and providing incentives to adopt standards are particularly promising in fostering the growth of small and medium enterprises.

To support governments in their efforts to maximize the decent work contribution of foreign direct investment (FDI) while ensuring international policy coherence, in 2016, ILO and the World Association of Investment Agencies (WAIPA) signed a cooperation agreement on FDI and decent jobs, sustainable businesses, more inclusive growth and better sharing of the benefits of foreign direct investment (FDI). ILO, with its International Training Centre (ITC-ILO), and WAIPA regularly co-organize courses on investment facilitation, sustainable development and decent work, using the MNE Declaration as the basis. Other contributing partners include UNCTAD and UNIDO.

ILO and ITC-ILO also collaborate with UNCTAD, UNIDO, UN-OHRLLS, and WAIPA to undertake a needs survey and develop an Executive College for training IPAs from 20 least developed countries (Afghanistan, Djibouti, Eritrea, Gambia, Haiti, Kiribati, Liberia, Madagascar, Malawi, Mozambique, Rwanda, Sao Tome and Principe, Senegal, Somalia, South Sudan, Sudan, Timor Leste, Togo, Tuvalu and Uganda). The survey is part of Phase I of a two phased “Capacity Development Programme for Investment Promotion Agencies of Least Developed Countries”, funded by the Enhanced Integrated Framework (EIF).
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