The Policy Framework for Investment (PFI) has been extensively used in dozens of countries since it was first endorsed in 2006. The OECD is currently conducting a multi-stakeholder update of this instrument ensure its continued impact in a world that has significantly changed over the past seven years. Find out more about the Policy Framework for Investment and the update process here http://www.oecd.org/daf/inv/investment-policy/pfi-update.htm

1. The benefits of private investment are widely recognised and extend beyond
the economic contribution to growth. Private investment is one of the primary
channels for the creation of new jobs. It is a vehicle for introducing innovation
and new technologies, including those associated with greening the economy.
Private investment is also increasingly serving as a channel for spreading best
practices in responsible business conduct.
A key role for government
In order to reap these benefits, governments are looking for ways to encourage
private investment. Initially it was thought that deregulation and openness to
foreign investment was the best approach. While an open, transparent, and fair
policy framework is still recognised to be of central importance, the
experiences of developed and developing countries in recent years have shown
that these are necessary but not sufficient conditions. A more proactive
approach that recognises the diversity of policy domains that can affect
investment conditions is also needed.
How the OECD is helping: the Policy Framework for Investment
In view of the central role that governments play, the OECD hosted a Task Force
of 60 governments between 2004 and 2006 which developed the Policy
Framework for Investment (PFI). The purpose of the PFI is to help all
governments in their efforts to boost private investment. It represents the
OECD’s response to the recommendations in the 2002 Monterrey Consensus on
the need for more private investment if we are to meet the Millennium
Development Goals.
The PFI is the most comprehensive and systematic approach for improving
investment conditions ever developed. It covers 10 policy areas including
investment, competition, tax, corporate governance, anti-corruption, finance,
infrastructure, public governance and other policy domains which affect the
business climate.
The PFI is neither prescriptive nor binding. It emphasises the fundamental
principles of rule of law, transparency, non-discrimination and the protection of
property rights but leaves for each country the choice of policies, based on its
economic circumstances, institutional capabilities, and development objectives.
The PFI recognises that one size does not fit all.
The Policy Framework
for Investment
www.oecd.org/investment/PFI-update.htm
JULY 2014

2. Who uses the PFI and in what ways?
 The PFI has been used by over 25 countries at
varying levels of development and across all
continents as they have undertaken OECD
Investment Policy Reviews (IPRs).
 African and Southeast Asian countries are using
the PFI to conduct IPRs within the frameworks
of the NEPAD-OECD Africa Investment Initiative
and the ASEAN-OECD Investment Programme.
 The Investment Reform Index of the Investment
Compact for Southeast Europe applies the PFI to
measure and communicate progress on
investment climate policy reforms.
 In the Middle East and North Africa, countries are
using the PFI to develop and implement business
climate development strategies that measure the
process of investment policy reform.
 In Latin America and the Caribbean, a
programme based on the PFI was launched in
2010 to increase the contribution of private
investment to economic and social development
in the region.
 Established regional economic communities,
such as the Association of Southeast Asian
Nations (ASEAN) and the Southern African
Development Community (SADC), are using the
PFI to promote policy harmonisation among
their members.
 Sectoral adaptations of the PFI covering
investment in agriculture and investment in clean
energy infrastructure are also being used by
governments pursuing reforms in specific areas.
The impact of a PFI-based country review
The PFI fosters cross-government and participatory
approaches. IPRs are driven by multi-agency task
forces constituted by beneficiary governments
themselves. IPRs are characterised by the active
participation of a wide range of stakeholders with
high-level support.
A significant impact of the PFI is its ability to provide
a coherent approach to development with country-
level policy recommendations, thus building a
constituency for reform. This has been seen in
Mauritius where the review’s recommendations fed
into the country’s 2013 budget; in Zambia where a
public private partnership (PPP) training
programme was implemented as a result of a
recommendation to strengthen the capacities of
PPP officials; and, in Myanmar where reforms to
promote responsible business conduct are
underway and where the International Finance
Corporation is using the review as a reference for its
in-country technical assistance.
Updating the PFI
Since the PFI was endorsed in 2006, the global
policy landscape has undergone major changes, and
the OECD, within the framework of its Development
Strategy, has called for a review of the PFI. The
experiences of developing countries and regions
with investment policy reviews will be used as an
integral part of the update.
Launched in March 2014 at the OECD Southeast
Asia Regional Forum, the update is an inclusive
process led by a Task Force co-chaired by Myanmar
and Finland. The update is guided by the OECD
Advisory Group on Investment and Development
and is scheduled for completion in May 2015.
CONTACT www.oecd.org/investment/pfi-update.htm
Mike Pfister mike.pfister@oecd.org
Investment Division Tel. +33 1 4524 8448
Directorate for Finance and Enterprise Affairs
Organisation for Economic Co-operation and Development
2 rue André-Pascal – 75016 Paris – France