Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
82
The report demonstrates that there are number of points to consider:
 Enhancing capital flows can be positive for economic growth and development but
capital account liberalisation needs to be undertaken in a sensible manner and certain
macroeconomic and financial system preconditions need to be in place before the
benefits of international capital mobility can be fully realised
 The COMCEC Member States comprise a very wide set of heterogeneous countries,
where some similarities can be drawn between countries within a particular income
group. There is no “one size fits all” approach in terms of identifying barriers,
opportunities and hence ways to enhance capital flows
 What COMCEC Member Countries do often share within a given income group are
where they are currently positioned in terms of achieving levels of political stability
and economic development and therefore what reforms they need to be prioritising
first in order to attract more capital flows.
The diagram below demonstrates the following in the context of attracting financial capital
flows:
 Introduce investor
protection guarantees
Introduction of investor-
friendly fiscal measures
such as:
 Exemption from import
duties
 Investment tax credits
 Large corporate income
tax deductions
 Sector-specific (e.g.
mining) additional tax
benefits
 Region-specific (e.g.
country’s interior,
urban periphery)
additional tax benefits
 Cash grants for
greenfield or
knowledge-based
investments
 Setting up Special
Economic Zones with
industry-targeted
infrastructure
 Setting up free trade
zones
UMICs – tax incentives
often already
established in most of
these countries but
not as well widely
implemented as in
HICs
LICs / LMICs –
has worked very
well in
Mozambique to
attract FDI. Has
also worked well
in GCC
HICs – most of
these measures
already in place