Effects on development

Any properly managed internationalisation process, in addition to driving development in the host country, is a vehicle for transferring knowledge and extending good business practice.

Foreign direct investment generates significant benefits, both direct and indirect, for local economies and communities, but also for the Spanish economy and national enterprise. Moreover, according to the new theories on development put forward by academics and confirmed in the real world, economically viable and sustainably managed projects are the ones best positioned to generate long-lasting benefits for both investors and the target country.

COFIDES is specifically mandated to contribute to the development of emerging and developing countries by financing internationalisation projects, and shares this responsibility with project sponsors and other participants.

Since 2006, COFIDES quantifies the potential effects of the direct investment projects for which financing is approved, with a view to interpreting their actual effects on development. These estimates are made with its Operation Impact Rating scheme (based on the GPR® tool authored by DEG, the German development finance institution).

The parameters used to calculate these rates are shown in the chart below.

In the aggregate, the distribution of the direct investment projects approved from 2007 to 2010 by expected effects on host country development is as follows:

More detailed facts and figures about the results of this exercise can be found in the company’s yearly Sustainability Report.

This system can also be used to determine the aggregate effect on development attributable to the European Development Finance Institutions (EDFI), of which COFIDES is a member (www.edfi.be).

As a development finance institution, COFIDES routinely monitors not only the financial aspects of its projects, but the factors that ensure their sustainability, including the environment, social issues, corporate governance and effects on development. COFIDES thereby contributes to the visibility and consolidation of these new questions in the operational structure of both COFIDES and the projects financed.

Further information:

The Growing Role of DFIs in International Development Policy

International Finance Institutions and Development through the Private Sector