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UNITED NATIONS CONFERENCE ON TRADE & DEVELOPMENT (UNCTAD)

UNCTAD is a permanent inter-governmental body established by the United Nations General Assembly, responsible for dealing with development issues, particularly international trade.

WHY IN NEWS?

India’s rank jumped one notch to 7th position among top recipients of foreign direct investment (FDI) in the 2021 calendar year, according to the United Nations Conference on Trade and Development (UNCTAD).

ABOUT UNITED NATIONS CONFERENCE ON TRADE & DEVELOPMENT (UNCTAD)

  • UNCTAD is a permanent inter-governmental body established by the United Nations General Assembly in 1964.
  • It is responsible for dealing with development issues, particularly international trade. Transport are most important priorities of UNCTAD.
  • The Conference ordinarily meets once in four years. The second UNCTAD Conference took place in New Delhi, India in 1968.
  • Members: 195 countries
  • Headquarters: Geneva, Switzerland

OBJECTIVES OF UNCATD

UNCTAD, with its work in the national and global levels, aims to help countries to:

  1. Understand options to address macro-level development challenges.
  2. Acquire beneficial integration into the international trading system.
  3. Reduce the dependency on commodities by diversifying the economies.
  4. Decrease their exposure to debt and financial volatility.
  5. Increase development-friendliness by attracting more investments

REPORTS PUBLICATION BY UNCTAD

  1. Trade and Development Report
  2. Trade and environment Review
  3. World Investment Report
  4. Least Developed Countries Report

WHAT IS FOREIGN DIRECT INVESTMENT (FDI)?

  • Foreign direct investment (FDI) is an investment from a party in one country a business or corporation in another country with the intention of establishing a lasting interest.
  • With FDI, foreign companies are directly involved with day-to-day operations in the other country.

HOW IS FDI DIFFERENT FROM FII?

  • FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country.
  • On the country, FII or Foreign Institution Investor is an investment made by an investor in the markets of a foreign nation.
  • In FII, the companies only need to get registered in the stock exchange to make investments.
  • The Foreign Institution Investor is also known as hot money as the investors have the liberty to sell it and take it back. But in Foreign Direct Investment, this is not possible.
  • In simple words, FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily.
  • This difference is what makes nations choose FDI’s more than FIIs.
  • In 2013, a four-member committee headed by Arvin Mayaram was constituted for giving clear definitions to FDI and FII with an aim to remove ambiguity over the two types of foreign investments.
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