How to Boost Foreign Investment

Economic globalization, together with a rebalancing of power between the world’s north and south, has made developing countries, and many companies within them, key global economic actors. This provides a new rationale for strengthening the international framework to protect foreign investment.

MADRID – Economic globalization, together with a rebalancing of power between the world’s north and south, has made developing countries, and many companies within them, key global economic actors. This provides a new rationale for strengthening the international framework to protect foreign investment.

Once upon a time, global foreign direct investment flowed from only a few sources: the traditionally wealthy states of Europe, North America, and Japan. But cross-border investment from countries such as Brazil, India, and China is now flowing not just to other emerging and transitional economies, but also to the “old” FDI-exporting states.

These changes have increased the complexity of the international investment regime, and should broaden interest in developing a more effective investment-protection framework. But just the opposite is happening: a progressive weakening of protection, with states increasingly flouting their treaty obligations and skirting or ignoring the outcomes of international dispute-resolution proceedings.

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