Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
25
administrative assistance. Fiscal incentives in contrast to, for instance, grants (like in the EU),
are often used in emerging and frontier economies as limited funds are available for up front
financial incentives. Where fiscal incentives are used to attract FDI in for instance OECD
(Organisation for Economic Cooperation and Development) countries they are often rule based
since changes in taxation in most cases require legislative action. 39
Any well-developed incentive policy should be structured and evaluated through in three
different categories:
 Structure and targets : including intended sectors and investors, transparency, time
frame and year of establishment;
 Eligibility and benefits: dealing with the application procedure and processes and the
actual content of the incentive framework (i.e. benefits and payments); and
 Monitoring and evaluation: relating to monitoring and measuring the beneficiaries’
performances and the use of clawback mechanisms.
2.4 Importance of FDI in Agricultural Sector for Host Economies
Before analysing the effect of FDI in the agricultural sector, it is first necessary to examine the
overall inward FDI flows to the COMCEC Member Countries. One obvious trend is that FDI flows
increased from almost US$ 37 billion in 2003 to US$ 173 billion in 2008 after which it dropped
rapidly over the 2009-2011 period and increased slightly again over 2012 to US$139 billion (see
table 8).
Table 8: Inward FDI Flows for the COMCEC Member Countries
Inward FDI Flows 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
US Dollars at
current prices and
current exchange
rates in billion
36,9 52,8 88,4 124,5 147,0 173,8 138,7 136,4 138,2 139,4
Source: UNCTAD, 2013.
As a percentage of world totals the COMCEC Member Countries together are responsible for just
over 10 percent of inward FDI flows. However, as a share of GDP the percentage is lower
approximately 2 percent, which is presented in Figure 9.
39 OECD, 2003.