The EU funded project EDILE has officially been launched on April 15th in Florence, during a public conference held at our offices in Toscana Promozione, the Agency of Economic Promotion of Tuscany.
The EDILE project aims at enhancing the inclusive development of local economies thanks to an improved evaluation of investment projects.
The project provides economic bodies in charge of regulating or implementing investment projects with evaluation tools and guidance which will enable them to maximise local economic spillovers such as job creation, subcontracting and environment conservation.
Around forty actions are planned in Lebanon, Palestine and Tunisia in 2014 and 2015. The EDILE project is implemented by ANIMA and 7 Euro-Mediterranean partners, under the ENPI-CBC-MED programme of the European Union.
The EDILE project is implemented over a 24-month period from 17 December 2014 to 16 December 2015.
Network and Partners:
Coordination: ANIMA Investment Network (France),
Partners: Chamber of Commerce, Industry and Agriculture of Beirut-Mount Lebanon (CCIA-BML, Lebanon), Palestinian Industrial Estate and Free Zone Authority (PIEFZA, Palestine), Agence pour la Promotion de l'Industrie (API, Tunisia), Office de coopération économique pour la Méditerranée et l'Orient (OCEMO, France), ClassM (France), Toscana Promozione (Italy), iesMed (Spain).
Strategic partners: BusinessMed, Ministère du Développement Régional et de la Planification (Tunisia), WWF (Italy), Région PACA (France), Agence des Villes et Territoires Méditerranéens Durables (France), Agence Française de Développement (France), Invest in Greece (Greece), Finances Conseil Méditerranée (France), Caisse des Dépôts et Consignations (France).
INTERVIEW A EMMANUEL NOUTARY – ANIMA Investment Network, General Delegate
Under which conditions foreign investments could contribute to local economic development?
“The question is not if investment contribute to local economic development, since most of the time they do contribute, but how they can contribute more.
The condition is probably the development of a real partnership between the territory (or the country), and the investor. To be successful this partnership should be based on a “more for more” basis:
More local economic inclusiveness from the investment project, which means more local jobs, more local subcontracting, more local capacity and know how transfer. And as counterparty, more value for the investor in the country, which means more access to the authorities, to support services for its installment, more incentives where cases may be, and overall more recognition about its role for the development of the country, which means an improved image and reputation on the domestic market.”
Which kind of tools could be useful for an assessment of their socio economic impact?
“Many tools exist to assess the different aspect of investment projects. These are usually methodologies and assessment grids to quantify financially the various dimensions of the project impact: financial return, environmental damages, social impact (promotion/ integration/ destruction of the local communities), etc. EDILE will obviously capitalize on many of these existing tools to propose a set of methodologies and evaluation techniques, as well as many illustrative case studies.
But EDILE will differ for the following reason:
– When most of the assessment tools concern projects above 10 million euros, EDILE is willing to propose tools adapted for smaller projects, therefore lighter, but scalable
– EDILE will particularly focus on the “inclusiveness” part of the evaluation: valorize the quality and quantity of jobs, the transfer of know how, the integration within local industrial and economic tissue through subcontracting.”
What can the relevant institutions in order to maximize the economic and social spillovers?
“Investment agencies or institutions welcoming investment could professionalize in order to better accompany the investment project to more social and economic impact. To this end they could develop or access the expertise to understand the project and the objectives of the investor, in order to evaluate its social and economic impact, and eventually propose alternate solutions if some exist which can maximise this impact. In some cases, an incentive will be necessary for the investor to switch to the alternate proposition, of the agency: be it specific support services or a VIP treatment by the administration. Financial incentives also exist in most of the countries. They could be scaled depending of the impact of the investment project. Another incentive could be the valorization of the investor by the investment institutions or by the national or local authority: offering visibility or a special statute of “citizen investor” for instance to facilitate their penetration on the local market. “
INTERVIEW to Bénédict de Saint-Laurent – ANIMA Investment Network. Scientific Advisory
Under what conditions foreign investments could contribute to local economic development?
The experience of numerous countries, as shown by economic literature review, testifies that foreign investment generally contributes to GDP growth, domestic investment and job creation. This is understandable: foreign investment brings extra-resources, mainly capital – not only money, but also, and this is very important, immaterial capital: knowledge, patents, technologies. These impacts are stronger when the receiving country or site is well prepared. For instance, a certain threshold in local education level is needed to fully benefit from immaterial inputs from abroad.
The problem with FDI in the Mediterranean region, especially the Southern rim, is not the global advantages from these projects – the advantages do exist -, but the issue of redistribution of wealth brought by this development model. The incoming mega-projects benefited to few people and companies – not to the whole population and this played a role in the recent Arab revolutions.
Which kind of tools could be useful for an assessment of their socio-economic impact?
A complex question. So far within EDILE, we have identified around 70 criteria along which any investment project can be assessed. There are more than 200 existing assessment methods – depending on the evaluator’s point of view. Banks and financiers are looking at the financial return. Lenders are keen to perform stress tests – what happens to the project if the initial assumptions do not become real. Economists are complementing or correcting the financial balance by introducing ‘externalities’ – these effects that are created by the project but not supported by it. For instance, air pollution, damage to the ecosystem on the negative side, or creation of indirect jobs on the positive side, are taken into account in the cost-benefit analysis. The difficulty is often to assess the value of intangible goods or services: value of a piece of forest, value of an accident (dead person etc.), value of noise etc. These values often range from 1 to 100. Socio-environmentalists suggest other kinds of assessments: social assessment, carbon balance of the project, project life cycle etc. These audits are costly and only performed for major projects. In EDILE, we are developing a toolkit proposing a set of concrete instruments for the evaluation and optimisation of medium projects (around €5 to 50 million).
What can the relevant institutions do in order to maximizes the economic and social spillovers?
For major projects, again, a set of indicators exists – e. g. the UN ‘global compact’ defining mostly what should be avoided (hiring children or polluting the environment). Such methods are used by the major development banks, the World Bank, the EIB etc. These methods are defensive (don’t do this). In EDILE, we want to be positive and add a chapter about creative contributions: can the project be an opportunity for the local community and how? There are plenty of solutions. First, we can look at the procurement chain of the new company. For reliability reasons, it often prefers to come with its own foreign suppliers – we may help by identifying the local resources in the same field and suggest increasing local procurement. Most companies needs some IT services, printing workshops, canteens, gardening or security services, fleet management, dry-cleaning etc. And this has to be done locally and may be outsourced. Second, we can look at all the by-products of the company. Are there materials which can be recycled? If electric power is generated, is there some heat that could benefit,, through cogeneration for a local heat circuit for green houses etc..Third, most projects are contributing directly or indirectly on social benefits, whether by building some needed piece of infrastructure (road, dispensary) or by implicitly providing education skills for instance. Each project is specific and there is no general recipe. But any foreign project has to be incorporated in a local industrial fabric – this will at the same time reinforce its social acceptance and secure its economic sustainability.