At last month’s annual Ministerial meeting of the Organization for Economic Cooperation and Development (OECD), the 34-member organization adopted and issued an important update to the OECD’s Policy Framework for Investment (PFI), first adopted nine years ago in 2006. Basic information on this OECD investment policy effort, including the text of PFI, the OECD’s fact sheet and press release, the Ministerial Council’s action on the PFI, and relevant background materials are available here.

The PFI offers a broad-based checklist of policy recommendations for consideration by individual governments, especially developing country governments who want to attract and retain Foreign Direct Investment (FDI).  The checklist is voluntary and has been used successfully in connection with OECD advisory services, regional FDI policy dialogues and policy review of individual countries that step forward to use this policy tool.

USCIB, both directly and through the OECD’s Business and Industry Advisory Council (BIAC) has been quite active in this effort to update the PFI.  USCIB staff and member company representatives have participated in reviews of draft versions of the update held in Paris, Brussels and Washington as well as playing a leading role in authoring detailed formal BIAC comments into the OECD drafting process.  I was honored to lead BIAC teams in the formal stakeholder consultations on PFI held in Paris and Brussels over the past year.  USCIB members Kimberley Claman of Citigroup and Nicole Bivens Collinson of Sandler Travis & Rosenberg P.A. were panelists at a joint OECD/World Bank seminar on the PFI held in Washington this spring.

As in so many policy areas, in investment the critical variable is host government commitment to policy reform and implementation.  PFI is not a panacea or magic wand to attract investment. It should not be oversold. But in the hands of a government committed to policy reform in the investment area and beyond, the PFI has proven it can be a useful, practical tool to help improve investment climate to promote growth and development through FDI.

I commend the OECD for a job well done in updating the PFI and for the increased priority the organization is according to investment and FDI issues within OECD member countries and beyond.

This post was originally published on the Investment Policy Central website.