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Credit ratings have inadvertently contributed to financial instability. This paper recommends that ratings of governments or companies should be seen as one of several tools to measure risk, and not as the sole and dominant one. Over-reliance leading particularly to abrupt downgrades, can lead to deleterious selloffs of securities with the potential for broader spillovers, triggering further sell-offs. Actions by ratings agencies to make changes in ratings less abrupt have been counter-productive: much market reaction occurs when warnings are released rather than when the actual rating changes. And sovereign ratings could have taken better account of debt composition and contingent liabilities. Investors must also be weaned off credit ratings too, and perform their own risk assessments according to their size, sophistication, and the instruments being rated. The main ratings agencies should be subjected to increased oversight
This new initiative compares FDI regulation around the world. It presents quantitative indicators on laws, regulations, and practices affecting how foreign companies invest across sectors, start businesses, access industrial land, and arbitrate commercial disputes. Data by country or topic, reports and other information are available here.
The 42 governments adhering to the Guidelines for Multinational Enterprises have started work on an update. Background information is available here.
Transnational corporations are increasingly optimistic about the international investment environment and their own prospects for FDI this year and beyond, according to UNCTAD's World Investment Prospects Survey 2010-2012.
In response to the global crisis, IMF and FSB have made several recommendations (see more) related to FPC monitoring. These include more effective capturing and monitoring of risk in the financial sector; financial linkages of systemically important financial institutions; cross-border banking flows; investment positions and exposures; vulnerability of domestic economies to shocks; and effective communication of official statistics to enhance awareness of available data for policy purposes.
This review of current practices among the 100 largest institutional investors reveals: most large Transnational corporations (TNCs) recognise the importance of CSR yet their standard of communication varies widely. Responsible investment practices have become common features of the world's 100 largest pension funds. At least basic climate change related information is now reported by most large TNCs, but with significant inconsistencies and inadequacies. A number of voluntary initiatives are taking a leading role in designing and facilitating CSR and responsible investment instruments.
Uganda disseminated preliminary results for its Private Sector Investment Survey 2009 in July. This covered data for 2007-8, and tracked the impact of the global economic crisis. The preliminary report is now available online, along with reports for its earlier surveys.
In March 2010, the UK Department for International Development asked DFI to survey developing countries' views of multilateral institutions' performance, to inform its decisions on where to allocate its funding for the next five years. The full report is now being published. It could also be read in conjunction with developing country views on the IMF and World Bank, assembled for the G20 in Freetown and London.
Oxfam commissioned DFI to report on the impact of the global financial crisis on low-income countries' budgets, and their spending to reach the Millennium Development Goals. The report can be seen here, and for press coverage in the Guardian see here.
At the request of the Government of Sierra Leone, Development Finance International commissioned Nancy Alexander, Director of the Economic Governance Programme at the Heinrich Boell Foundation in Washington, to analyse how to improve the World Bank resource allocation system to benefit African countries. The report resulted in the creation of an African Task Force on the CPIA. The declaration of the African Caucus meeting is available here.
