This document summarizes a presentation on analyzing the business environment attractiveness for forestry investments across Latin American countries. It discusses the Inter-American Afforestation and Forest Investment Index (IAIF), developed by the Inter-American Development Bank, which measures and compares 20 indicators across 3 sub-indexes (supra-sectoral, inter-sectoral, and intra-sectoral factors) to provide a quantitative analysis of the business climate. The 2002 IAIF results showed Brazil had the highest real score and potential, while Mexico, Colombia, and Argentina also had high potential for improvement. The document outlines how the IAIF can be used and the Process to Improve the Business Climate for Forest Investments (PROMECIF) being

1. Forest Business Environment Attractiveness
comparison of Key Latin American Countries
Dr. José Rente Nascimento
Inter-American Development Bank
AEL FinPRO Seminar
The Opportunities for the Forest Industry in Latin America – Should the
smaller players follow the larger ones?
8 June 2006, Helsinki, Finland
Inter-American Development Bank
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2. Overview
I- IDB in one minute
II- IAIF
– Objectives
– Usefulness
– Model
III- Results
– Sub Indices
– Supra, Inter,
– Intra
IV- PROMECIF and
IAIF Evolution
Inter-American Development Bank
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3. I- IDB
I
Inter-American
Development
Bank
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4. I- IDB
Basic Facts: the IDB Group
IDB Group: IDB (1959); IIC (1989); MIF (1992); and PRI
(1994)
Oldest and largest regional multilateral development bank
Largest source of development finance for Latin America
– Approved over $ 118 billion in loans
– Total cost of projects: $281 billion
46 Member countries
- 26 Borrowing (50 % of the shares)
Inter-American Development Bank
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5. II- IAIF
II
IAIF Results
2002
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6. II- IAIF
IAIF - Objectives
General objective: To measure the business climate
for investments in the sustainable forest business.
The IAIF allows the systematic, periodic,
quantitative and more rigorous analyses of the
factors that affect the success of forest direct
investment and business decision-making.
Inter-American Development Bank
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7. II- IAIF
IAIF principal clients
•
International investors and entrepreneurs
•
Domestic investors and entrepreneurs
•
Governments (national, regional or local)
•
National and international NGOs
•
Bilateral and multilateral donors
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8. II- IAIF
The IAIF is useful for
•
•
•
representing the forest business climate as a single
number per nation
initial screening BY INVESTORS of countries
with best investment climate for sustainable forest
businesses
facilitating a more precise and constructive
dialogue about forest business climate issues
among stakeholders
Inter-American Development Bank
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9. II- IAIF
The IAIF is useful for
•
•
•
setting priorities among policy areas by
governments interested in improving their forest
business climate
monitoring the success of policy interventions on
specific indicators
identifying issues where national performance is
above or below expectations or aspirations
Inter-American Development Bank
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10. II- IAIF
The IAIF is useful for
•
serving as a working framework to encourage
research, debate, dialogue, and learning.
•
clarifying policy and investment tradeoffs
•
designing intervention strategies and better define
goals, programs, and policies
Inter-American Development Bank
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11. II- IAIF
The IAIF allows comparisons of
countries, regions, years, indicators,
sub-indexes, such as
Among nations in a given year
Country’s performance trends over time
Country’s performance in relation to neighbors
or sub region for given year
Subindex performance and trends
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12. II- IAIF
The IAIF allows analysis of:
Contribution to IAIF
Contribution to IAIF
Measured
Measured
(weighted)
(weighted)
(real)
(real)
Differential
Differential
(potential improvement)
(potential improvement)
Potential
Potential
(potential maximum)
(potential maximum)
Inter-American Development Bank
Simulations
Simulations
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13. II- IAIF
IAIF – Basic hypothesis
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14. II- IAIF
Methodology – 3 Sub indexes
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15. II- IAIF
Sub index – SUPRA sectorial factors
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16. II- IAIF
Sub index – INTER sectorial factors
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17. II- IAIF
Sub index – INTRA sectorial factors
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18. II- IAIF
Methodology
20 indicators; >80 variables
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19. II- IAIF
IAIF and Sustainability
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20. II- IAIF
Sources of information
•
•
Secondary data and indexes (World Bank, FAO,
World Economic Forum, etc.)
Primary information through surveys
–
–
–
–
Agriculture policies
Planting and harvesting restrictions
Adverse actions
Favorable supports
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21. III- Results
III
IAIF Results
2002
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22. III- Results
IAIF Real (measured) - 2002
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23. III- Results
Real – Potential - Differential
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24. III- Results
IAIF – Real for Best Performers
Brasil
60
53
Chile
Argentina
44
Uruguay
44
Costa Rica
41
Mexico
40
Colombia
40
0
10
20
30
40
Inter-American Development Bank
50
60
70
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25. III- Results
IAIF – Highest Potential
99
Brasil
86
Mexico
81
Colombia
Argentina
79
Venezuela
78
Peru
78
75
Bolivia
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26. III- Results
Possible improvement over
current levels (%)
México
115
101
Colombia
Argentina
81
69
Costa Rica
66
Brasil
60
Uruguay
Chile
39
Inter-American Development Bank
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27. III- Results
SubIndex SUPRA
51
Brasil
76
Chile
Argentina
50
Uruguay
50
77
Costa Rica
69
Mexico
66
Colombia
0
20
40
60
Inter-American Development Bank
80
100
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28. III- Results
SubIndex INTER
46
Brasil
63
Chile
46
Argentina
57
Uruguay
Costa Rica
51
Mexico
51
Colombia
50
0
20
40
Inter-American Development Bank
60
80
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29. III- Results
Sub Index INTRA
Brasil
69
Chile
42
Argentina
41
Uruguay
36
Costa Rica
27
Mexico
27
29
Colombia
0
10
20
30
40
Inter-American Development Bank
50
60
70
80
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30. III- Results
INTER vs INTRA
Brasil
Chile
Argentina
INTRA
Uruguay
INTER
Costa Rica
Mexico
Colombia
0
20
40
Inter-American Development Bank
60
80
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31. III- Results
IAIF – Sub Indexes
Brasil
Chile
Argentina
IAIF
INTRA
Uruguay
INTER
SUPRA
Costa Rica
Mexico
Colombia
0
20
40
60
Inter-American Development Bank
80
100
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32. III- Results
INTER-Sector Indicators – Sample
Prop. Rig.
Argentina
Brasil
Chile
Labour
Colombia
Costa Rica
México
Uruguay
Ec. Infrast.
0
25
50
Inter-American Development Bank
75
100
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33. III- Results
INTRA-Sector Indicators
Dom. Market
Argentina
Brasil
Chile
FVL
Colombia
Costa Rica
México
Uruguay
For. Res
0
20
40
60
Inter-American Development Bank
80
100
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34. III- Results
Perception Indicators
Argentina
Brasil
Ag. Policies
Chile
Restrictions
Colombia
Adverse
Costa Rica
Supportive
México
Uruguay
0
20
40
60
Inter-American Development Bank
80
100
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35. IV- PROMECIF
IV
PROMECIF and
IAIF Evolution
Inter-American Development Bank
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36. IV- PROMECIF
What is PROMECIF?
Proceso de Mejoría del Clima de Negocios para
Inversiones en el Sector Forestal.
Process to Improve the Business Climate for Forest
Investments.
Process that uses IAIF’s methodology as a basis for
improving the climate for investments in sustainable
forest businesses.
Inter-American Development Bank
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37. IV- PROMECIF
PROMECIF’s three phases
I: Country identification
and commitment to
change.
III: Implementation,
follow-up, and
evaluation.
II: Diagnosis and
strategy definition.
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38. IV- PROMECIF
The case for Nicaragua (2002)
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39. IV- Evolution
Recent developments
IDB licensed FGV and INCAE to calculate the IAIF every
two years and to provide associated goods and services to
governments and the private sector
IAIF 2004 will be presented in a event latter this year
PROMECIF is being (or about to be) applied in: Paraguay,
Panama, Equator, and Honduras.
IAIF-BRAZIL: Index will be adjusted and calculated for
Brazil’s states.
Development of Sub-Indices for plantations and natural
forests.
Inter-American Development Bank
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40. IV- Evolution
Potential partners
– Multilateral Banks: Asian Development Bank;
African Development Bank; World Bank
– UN related agencies: FAO; ITTO
– World Economic Forum Indexes partners
Current Partners:
Current Partners:
Fundação Getulio Vargas (Brazil, for South America)
Fundação Getulio Vargas (Brazil, for South America)
INCAE Business School (Costa Rica, for Central America,
INCAE Business School (Costa Rica, for Central America,
Caribbean, Mexico)
Caribbean, Mexico)
Inter-American Development Bank
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41. Further information
www.iadb.org/pforestal
forestal@iadb.org
Inter-American Development Bank
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