Opportunities For Foreign Investment And Essay, Research Paper

Minister of Labor and Social Affairs of Germany- Dr. Norbert Blm

Opportunities for Foreign Investment and Cooperation and Domestic Development

NARRATIVE

The change on the world’s political stage that followed the collapse of the Eastern bloc have brought about fundamental changes in the framework in which development and development cooperation take place. The realization that a market-oriented, social economic order and a society built on the basis of popular participation in the political process, has rapidly gained ground worldwide. This consensus opens up new opportunities for international cooperation. Development policy is no longer surrounded by geo-strategic considerations. Rather today it is oriented to the conditions which are crucial to developmental success.

The world is going through a process of economic, ecological and cultural globalisation which makes international cooperation quite essential. The problems of survival in the world can only be addressed by common but differentiated responsibility and a global partnership for development. Germany?s partner countries are developing at increasingly varied paces. A new cultural and political consciousness in many societies, positive growth in dynamic regions, persistent poverty and an increasing number of civil conflicts, all call for new and different responses in development policies.

As a result of the considerable rise in investments in economically successful partner countries, the ratio between flows of private capital and public funds deployed for development has shifted.

A number of developing countries have managed to integrate into the world economy. With growth rates clearly outpacing those of the industrial countries, they have formed new ‘poles’ of development within the global economy and have assumed considerable weight, either as competitors or in terms of demand. Against this background, the scope and opportunities for international cooperation – also for development – have widened significantly. Additional tasks have accumulated in the form of a new category of partners, the transition countries in Eastern Europe and the former Soviet Union. These countries are expecting particular support from Germany above all.

COOPERATION POLICY AIMS

The aim of Germany’s development policy is to improve the living conditions of people, particularly of the poorer sections of the population in partner countries. Germany will strive to maintain Metternich?s ?balance of power? by providing equal chances of realization to developing countries. Germany will attempt to tighten the economic gap between those countries working on the process of development and those countries which have reached a stable economical state. Thus, Germany?s development policy will initiate various programs for student exchange between schools and universities located in developing countries. Admission to local universities for students of the Third World countries will be facilitated and numerous financial promotions will be granted. At the same time, however, the exchange of students and training of personnel will follow the guidelines of Germany?s foreign policy. In more loose terms – Germany will not initiate any activity of development and cooperation policies in countries, that its foreign policy forbids. At no time will the development policy question decisions concerning aspects off its scope of action. Russia, China, Egypt, Saudi Arabia will be offered the chance to participate in various exchange programs. Iraq, however, will not be offered such a program until the foreign policy permits such an investment. The reason of Germany?s position concerning Iraq rests on the current conflict regarding the refusal to allow US weapon inspectors to investigate Iraq?s ?mass destruction? weapons. If Germany overlooks the fact of Iraq?s insubordination to NATO restrictions, and pursues a policy of aid, Germany could seriously harm the chances of being admitted in UN Security Council.

The guiding principle is a globally sustainable development which guarantees opportunities for development for today’s generation without limiting the chances of future generations. For globally sustainable development to be achieved, three concerns are central: productive economic growth, social justice and ecological sustainability (SOURCE HTTP://???). Development cooperation supports the realization of these three goals in partner countries by helping to alleviate poverty, promote economic growth through private-sector development and protect vital natural resources. The aim of globally sustainable development can only be achieved if industrial countries also implement necessary reforms and structural adjustments at every level. Cooperation efforts with Germany?s partners must therefore be complemented by coherent policies at home.

POLICY MOTIVES

The main motives behind Germany’s development and cooperation policy are a sense of ethical, humanitarian and political responsibility beyond the national borders. Germany, of course, has a keen interest in the preservation of vital national resources and defense against global threats. Global environmental protection has become a personal concern for many people today. When development cooperation addresses the causes of climate change and the destruction of vital natural resources in developing countries and countries in transition, where relatively small amounts of funding can make a greater impact than the fine-tuning of environmental protection techniques in industrial countries, it is making an effective contribution to global resource protection, especially in terms of costs. For years now 30% of all bilateral funds (http://www.bundesregierung.de/ausland/economy/acount.HTM), under financial and technical cooperation, have been spent on environmental protection measures. This trend has been a major factor in the enhancement and development of Germany?s environmental policy. The strive to keep the nation?s lands and rivers clean of pollution is of great importance to Germany. Not only does this fulfill the requirement of the 1992 UN Conference on Environment and Development in Rio de Janeiro (?http://www.government.de/ausland/index_e.html?), but also shows the strong desire of Germany to assure a healthy environment and climate to its labor force. Upon knowing the importance of these factors, Germany will push for the development of similar environmental policies of partner countries. Germany realizes that the implementation of an successful environmental policy in a developing country, requires spending a considerable amount of it?s revenue. In spite of that, Germany stands ready.

The reason behind Germany?s readiness to spend millions of DM on peaceful and environmental policies are two. First, it strives to show that it is no longer that evil power, which it was in World War II. It is no longer driven by the formula (personal class presentation, August 9th, 1997):

A: External Power drive

National Grandeur

Public Excitement

B: Economic Vested Interests

Military Vested Interests

Cultural Messianism

C: Domestic Power Drive

Bureaucratic Vested Interests

Germany has made an extreme shift since the end of World War II. And for that reason Nazi-time motivational formula no longer serves the needs and the causes of nowadays development policy. The second reason is that Germany wants to follow its tradition of financing ?the democratization process in the developing and reformist countries? (http://www.bundesregierung.de/ausland/economy/WORLD105.HTM):

For the period 1992-1994, Germany earmarked DM 27 million to help finance the democratization process in the developing and reformist countries and intends to increase this amount in the future. In the European Union Germany has always urged that the Europeans open their markets wider to the countries of Africa, Asia and Latin America, for free trade is, in the final analysis, even more important to the developing countries than development assistance?

?The humanitarian aid it has provided in recent years ? is considerably more than in previous years. Between 1991 and 1995, funds totaling DM 877 million were made available from the budget of the Federal Foreign Office alone.

POLICY CONTEXT

Development cooperation forms, together with foreign, external trade and security policies, are a fundamental part of Germany’s foreign relations and is an important instrument of peace policy. The success of development policy as part of Germany’s overall policy depends crucially on its working coherently together with other policies, such as foreign policy, external economic and trade policy, finance, environmental and agricultural policies. Germany will at all times will work in accordance with all other policies, thus trying to maintain the perfect unity of all branches of government.

POLICY PRINCIPLES

Development and cooperation are, in a sense, help towards self-help. The ultimate responsibility for providing a domestic environment favorable to development lies with Germany?s partners. Support provided in the form of development cooperation is subsidiary and complementary to the efforts of the governments and people themselves in partner countries. Inputs from outside are intended to provide impetus and start-up assistance, but not replace the efforts of the partners themselves. In that sense, development and cooperation policies can only be a contribution to sustainable development in Germany?s partner countries.

The active participation of people in the development process is a precondition for the achievement of sustained success. The efforts of our partner governments must be directed towards allowing people, particularly poor and discriminated groups in the population, to have a greater role in political, economic and social decisions. Under German development and cooperation policies the participation of the target group in the selection, planning, implementation and monitoring of all measures is an overarching principle.

The intention of development cooperation is to bring about change by improving the political, economic and ecological prospects of our partner countries and their people. Development cooperation intervenes in existing society structures and traditions by strengthening those forces that are working towards necessary improvements. This intervention, in order to be acceptable and successful, has to be appropriate. Development cooperation measures must therefore have to be fitted for local conditions. Questions to be pursued by Germany in this context are, which government or non-governmental organizations enjoy the confidence of the people, how capable project executing agencies or target groups are in resolving problems and how ethnic, religious and linguistic differences within a population impact on cooperation.

AREAS OF PRIORITY

Optimum impact with scarce funds can be achieved if they are focused on and used to overcome central development obstacles. German development cooperation has therefore identified three priority areas: poverty alleviation, environmental and resource protection and education and training.

Poverty alleviation measures are intended to advance the productive and creative potential of the poor and to enable them to create conditions by their own activities under which they can progress. At the forefront of these efforts are structural economic and social reforms which facilitate and stimulate the realization of human potential. Projects are designed to have a beneficial effect on poor groups in the population. Poverty alleviation covers a broad spectrum of measures. These include market reforms, the promotion of private-sector initiatives, job and income creation through individual entrepreneurial activity in agriculture, small-scale industry and trades as well as the creation of savings and credit groups.

Environmental and resource protection is the second focus of Germany’s development cooperation. It aims to preserve vital natural resources, shape economic development in our partner countries in an ecologically sound manner and put them in a position to participate in global endeavors to protect the environment. This takes place in the form of support for national environmental policies, programs and projects in our partner countries which serve to protect resources, by participating in international initiatives to protect particularly endangered ecosystems and by designing all aid projects in an environmentally sustainable manner.

Measures implemented in the third priority area, education and training, are intended to help build up the human capacity which will enable partner countries to achieve sustainable development. Education and knowledge are fundamental prerequisites for development. There are deficits in all partner countries which stand in the way of the free development of practical, vocational skills, creativity and self-reliance. Development cooperation supports in particular the provision of an adequate basic education and the improvement of vocational training. The idea is to communicate to people basic knowledge, and above all the practical application thereof, and thus help them directly in living their own lives.

Other fields in which German development and cooperation policies are active are the promotion of the private sector, technology transfer, rural development and food security, health and population policy, women in development, crisis prevention and emergency relief measures.

DOMESTIC LABOR AFFAIRS

Development cooperation also affects Germany as a trading and export nation. By promoting democracy and market economies it strengthens its economic partners, improves the environment for trade and investment and, not least, for Germany’s external economic activities, opens up new markets to German companies. In this way development cooperation secures jobs and contributes indirectly to funding other public tasks.

The scourge of mass poverty which prevails in large expanses of the planet constitutes a challenge to which any responsible policy must respond. Development cooperation provides assistance to people in need and in that respect, meets an ethical and moral obligation. Germany?s labor market strategy is to provide the maximum number of working places to qualified and not fully qualified personnel. This strategy will not only show that Germany is targeting a high percentage of employment but is also aiming high in navigating out of the recession which took place until 1994 (http://www.bundesregierung.de/ausland/economy/econ0301.html). Germany will work on further strategies that will provide available working places to the citizens. Numerous contracts, deals and quotations will be considered and if applicable will be implemented. Developing German companies and businesses will have the chance of going abroad and being trained by expert personnel from contracted partner countries. This strategy aims to prosper emerging businesses, private or not, so that after progressive development has taken place, those companies can open up job places. The opening of branches of local companies abroad is also a possibility of great importance. Local companies will be urged to investigate and research the opportunities of investing in developing countries. Those companies who manage to settle permanently on a foreign market will be comforted by tax or duty remittance. The purpose behind this foreign investment is that a company or a business will have better chances to enlarge its activities or even scope of interests and thus open up new sub-branches, once again providing jobs for the unemployed.

A major hit will be the joint venture of the establishing of a gas pipeline from Russia to Germany. When the project completes thousands of work places will be available. Citizens of Germany will be able to work both in and out of the country on one and the same project thus being a competitive and skilled employed force. Later, when other countries agree on using the pipeline for their local purposes, trained German personal can initiate a program for tutoring the other countries? employees.