Clause 1 - Development Assistance
International Development Bill
11:45 am
Mrs Cheryl Gillan (Chesham and Amersham, Conservative)
Yes, that point was so subtle that I had missed it; my hon. Friend makes it clear. I thank him for providing more detail.
I am conscious that I have been on my feet for some time, but, as I said at the start, a substantial part of the Bill is encompassed by clause 1 and the four amendments, which are of great importance. I move swiftly to amendment No. 4, which is intended to allow the Secretary of State to provide assistance for measures designed to attract foreign direct investment. That is based on the assumption that attracting foreign direct investment and private investment is a major purpose of development aid, because it helps to provide more tax revenue for Government to boost the local economy, to create jobs and to bear the risk if projects fail.
All experience shows that attracting foreign direct investment into developing countries is an essential element of poverty reduction. In chapter 1, page 18, the globalisation White Paper states:
``over the last few decades in reducing the proportion of people living in poverty has been largely the result of economic growth: raising incomes generally, including those of poor people. Economic growth is an indispensable requirement for poverty reduction.''
Taking those words at face value, we suggest that we add that objective to clause 1, to give voice to the Secretary of State's aspirations in the White Paper.
Foreign direct investment by multinational companies in developing countries boosts the local economy, creates jobs and helps to alleviate poverty. Foreign direct investment is far more important in the long term to developing countries than small increases in development aid. Foreign direct investment helps to remove some of the financial risks that Governments of developing countries face when they borrow from banks; companies bear the risk if their investments fail. If investment is successful, the host Government benefits from increased tax revenues and the investor benefits from the resulting profits.
I have seen that process at first hand. I referred to my experience of the former Soviet Union. It is a great pleasure to see how former satellite countries of that state have attracted foreign direct investment, boosted their economies and raised their standards of living. I am sure that we will hear anecdotes from many members of the Committee today, because many are well travelled and will have seen that process for themselves. That is not mind-blowingly new; it is received wisdom shared by all members of the Committee, so I encourage the Minister to consider including it in the Bill.
The Government themselves stress the importance of foreign investment in the globalisation White Paper. It states:
``The attraction of capital inflows is an essential element of a strategy to speed up sustainable development and poverty reduction.''
The document also states:
``A central feature of globalisation has been the substantial increase in movement of capital around the world. Foreign direct investment...to developing countries increased from US$36 billion in 1992 to US$155 billion in 1999, more than three times the level of development aid.''
Think of the contribution that that has made. Attracting foreign direct investment is vital to development.
If the Government have seized a window of opportunity to introduce the Bill, it would be foolish of them not to seize the opportunity to add this provision to it. It would send a signal to private investors that the Government and a future Conservative Government would positively welcome foreign direct investment and private investment in the countries to which we deliver development assistance.
I have taken some time and pains to speak to the four amendments. Notwithstanding the comments of some Labour Members, my hon. Friend the Member for South-West Devon—he has devoted great time and effort to his brief—my hon. Friends in Committee and I genuinely want to boost the Bill. I ask the Minister, in some way, to accept the amendments or acknowledge the issues that I have raised. I do not believe that he dissents from my point of view. I do not ask him to perform a difficult task, and it is not outwith the realms of possibility. The Opposition would bend over backwards to allow him to accede to our requests. In the spirit of co-operation, I ask him to accept our suggestions.