FDI Qualities Guide for Development Co-operation

Annex A. Guiding questions for donors and recipient country governments

The table below brings together the various guiding questions outlined within Chapter 3. This set of guiding questions can be used by the donor community and recipient country governments in specific developing country contexts.

Table A A.1.  Guiding questions for FDI donors and recipient country governments

Assessing and understanding the impact of FDI on sustainable development	Has an assessment of the impacts of FDI on productivity and innovation, job quality and skills, gender equality, and carbon emissions been carried out in recent years? Is further analysis required to understand the relationship between FDI and sustainable development? What is the country’s performance in terms of productivity and innovation; labour issues; gender equality; carbon and other GHG emissions? Which sectors are driving performance on each SDG area? Does concentration of economic activity in certain sectors present challenges when it comes to enhancing FDI impacts? What is the status of GVC integration (both through backward and forward linkages)? Which sectors are better integrated into GVCs? To what extent are SMEs integrated into GVCs? How do foreign companies perform on different sustainability areas compared to domestic firms? Are there regional disparities in the performance of foreign and domestic firms on sustainable development? How does FDI generates positive effects on productivity and innovation; job qualities and skills; gender equality? What are the impacts resulting from foreign firms’ direct operations in the country? From competition and imitation effects? From labour mobility of workers?
Identifying and aligning with national priorities on investment and sustainable development	What are the country priorities on productivity and innovation; job quality and skills; gender equality; and carbon emissions, as reflected and communicated in national strategies, policies and action plans? Have policy dialogues and consultations been organised with the government to discuss country priorities and plans on sustainable investment? Have all relevant institutions involved in investment and sustainable development been consulted? Have businesses and stakeholders been consulted on challenges and opportunities related to sustainable investment? How do national priorities compare to the assessment of the impact of FDI on sustainable development?
Ensuring co‑ordination and coherence within the development co‑operation community	Are there or has there been an engagement from the development co‑operation community on investment and sustainable development? What have been the outcomes of past projects? Are there ongoing projects that include a focus on enhancing the impact of investment on sustainable development? Do such projects target specific SDGs or SDG areas, including productivity and innovation, job quality and skills, gender equality, and / or carbon emissions? Based on the non-exhaustive list of development co‑operation options provided in Chapter 2: Are projects aiming to support policy coherence, continuity and implementation on investment and sustainable development part of the development co‑operation community portfolio? Are projects aiming to promote alignment between domestic regulation and international standards on investment and sustainable development part of the development co‑operation community portfolio? Are development co‑operation actors involved in incentivising firms to mobilise and enhance the impact of FDI on sustainable development? Are development co‑operation actors providing support to raise awareness and build capacity to foster the positive effects of FDI on sustainable development? Do development co‑operation actors involved in related topics engage in dialogues and co‑ordinate through formal or informal mechanisms? Do development co‑operation actors involved in investment and sustainable development seek alignment and complementarity in their projects’ objectives, terminologies, and activities? Is the development co‑operation community’s engagement aligned with the recipient country governments’ reform needs and priorities? With the challenges and priorities communicated by businesses? By stakeholders?
Identifying opportunities, trade‑offs and managing the risks of unintended consequences	Based on the assessment of FDI impacts on sustainable development, national priorities, consultations, and mapping of existing projects, are there specific support gaps where development co‑operation could support national priorities? Are there specific areas where support could complement, reinforce or enhance the impact of existing projects? Is the required expertise and capacity available to carry out the project? Are the institutional and framework conditions in place to ensure successful implementation and continuity? What will be the impact of the support provided on domestic and foreign businesses that are not targeted by the intervention? Is there any risk of creating harmful distortions? For what duration will the support be provided? How has this duration been defined? What will be the consequences of interrupting this support? What are the main risks to the environment, local communities, workers and other stakeholders, associated with the projects? How have these risks been identified? Have all relevant stakeholder groups been consulted in the identification of risks and opportunities? Where could project beneficiaries, local communities or any party affected by future projects seek resolution if they have any complaint? Would formal or informal grievance mechanisms be made available?
Engaging with businesses, trade unions and civil society	Have all relevant stakeholder groups been consulted as part of the project identification and definition phase? How could domestic and foreign firms be involved in the development, implementation and monitoring of future projects? How could civil society organisations, including local and national NGOs, trade unions, and local communities be involved in the development, implementation and monitoring of future projects? How do potential business and civil society partners manage their environmental and social risks? Has a proper due diligence process been carried out for all parties that may receive funding or be directly involved in project implementation?
Enhancing impact measurement and accountability in development co‑operation projects	Are there existing indicators of performance and monitoring and evaluation frameworks that can be drawn up to assess the impact of the development co‑operation assistance provided on investment and sustainable development? Do such frameworks include suitable metrics and indicators to measure the impact of assistance provided in terms of: FDI mobilised through the development co‑operation support Impact of FDI supported on productivity and innovation; employment and skills; gender equality; decarbonisation How will data be collected and processed? Does the monitoring and evaluation framework recognises and addresses potential constraints related to data availability? Does the monitoring and evaluation framework include plans for ongoing and dynamic monitoring, and integration of results into decision-making and potential project improvements? How much capacity and resources will be required to ensure suitable monitoring and evaluation throughout the project lifecycle? What mechanisms and processes could ensure impartiality and independence of project evaluation? Will any oversight body be involved in the monitoring and evaluation process? Through which modalities would information about the project be made available to the public?