As the Third United Nations Conference on Landlocked Developing Countries (LLDCs) approaches, our latest Investment Policy Monitor (no. 28) , published today, assessed progress in implementing the investment policy-related commitments of the Vienna Programme of Action for 2014-2024.

Key findings include:

• LLDCs prioritized the attraction of foreign direct investment (FDI) in their development strategies. Almost 9 in 10 investment policy measures adopted since 2014 aimed at promoting investment. Most focused on achieving the priorities of the Vienna Programme of Action.
• Close to one third of these measures focused on infrastructure development (priority 2), liberalizing key sectors like transport, energy, and telecommunications, offering tax incentives and establishing public-private partnership (PPP) frameworks. PPP projects rose by over one third (in value and number) compared to the previous decade.
• Nearly half of the measures were directed towards economic diversification and structural transformation (priority 5), with a focus on promoting the services sector. The share of investment projects in services increased significantly (from 27 to 47 per cent) and that of projects in extractive industries declined (from 32 to 20 per cent).
• In terms of regional integration related to investment (priority 4), LLDCs concluded at least 100 new international investment agreements over the past decade, including regional initiatives like the Eurasian Economic Union, the African Continental Free Trade Area, and the Regional Comprehensive Economic Partnership.
• Despite these advancements, total FDI inflows to LLDCs decreased by an average 2 per cent annually since 2014, heavily impacted by the decline in global FDI flows and by the COVID-19 pandemic. Their share of FDI inflows to developing countries shrunk from 4.3 to 2.8 per cent. Five LLDCs account for almost 60 per cent of FDI inflows.
• LLDCs also continue to perform poorly in cross-country benchmarks of productive capacities. This reflects the group’s socioeconomic and geographic challenges, as well as insufficient improvements in productivity, value-added by domestic producers, and long-term structural transformation.

The upcoming Conference presents a critical opportunity to reassess and reinforce the strategies laid out in the Vienna Programme of Action. This will require exploring new avenues to address the decline in FDI, by continuing to enhance the investment climate and facilitating investment in key sectors. It will also necessitate additional support from the international community, including through the promotion of innovative financing mechanisms and capacity-building for large-scale infrastructure projects.

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