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  • Author: Peter Nunnenkamp, Wan-Hsin Liu, Frank Bickenbach
  • Publication Date: 03-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: P. Chidambaram, India's Minister of Finance, claimed that "FDI worked wonders in China and can do so in India." However, China's example may also point to the limitations of foreign direct investment (FDI) liberalization in promoting the host country's economic development. FDI in China is heavily concentrated in the coastal areas, and previous studies have suggested that this has contributed to the increasing disparity in regional income and growth since the late 1970s.
  • Topic: Development, Economics, International Trade and Finance, Foreign Direct Investment
  • Political Geography: China, South Asia, India
  • Author: Rudolf Adlung
  • Publication Date: 03-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: A number of recent studies have discussed the implications of most-favored-nation (MFN) clauses in bilateral investment treaties (BIT s) and the possible need for, and role of, a multilateral framework for investment. Surprisingly, the relevance of existing multilateral disciplines, in particular under the General Agreement on Trade in Services (GATS), is seldom acknowledged in this context.
  • Topic: Economics, International Trade and Finance, Treaties and Agreements, Foreign Direct Investment
  • Author: Gary Hufbauer, Sherry Stephenson
  • Publication Date: 03-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: In Columbia FDI Perspectives, No. 102, Axel Berger claimed that the debate over a multilateral framework for investment is futile. We disagree. Following its achievements at the 9th Ministerial Conference in Bali, Indonesia, the World Trade Organization (WTO) should launch negotiations to draft a 21st century Investment Framework Agreement (IFA).
  • Topic: Economics, International Trade and Finance, Markets, Treaties and Agreements, Foreign Direct Investment
  • Political Geography: Colombia
  • Author: Joachim Karl
  • Publication Date: 02-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: In his famous book, "The End of History and the Last Man", published in 1992, Francis Fukuyama argued that Western democracy represents the end point of the socio-cultural evolution of humanity and the final form of government.
  • Topic: Economics, International Trade and Finance, Markets, Treaties and Agreements, Foreign Direct Investment
  • Political Geography: France
  • Author: Anthea Roberts
  • Publication Date: 01-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: There have been many calls for a rebalancing of investor protection and state sovereignty in the investment treaty system. However, another equally important shift is underway: the recalibration of interpretive authority between treaty parties and arbitral tribunals. In newer-style investment treaties, states are increasingly protecting and enhancing their role in interpreting and applying their treaties.
  • Topic: Economics, Government, International Trade and Finance, Markets, Treaties and Agreements, Foreign Direct Investment
  • Author: Sheng Zhang
  • Publication Date: 01-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The China-US bilateral investment treaty (BIT) negotiations have attracted attention due to the relative size and weight of both economies. Despite broad consensus about the importance of such a treaty, there is considerable debate about its shape and content. The debate is reflected in two recent Columbia FDI Perspectives. Donnelly argued that a China-US BIT should be modeled on the US Model BIT without "splitting the difference between Chinese and US positions", and that the possibility of meaningful BIT negotiations are "really up to China at this point".
  • Topic: Economics, Globalization, International Trade and Finance, Bilateral Relations, Foreign Direct Investment, Governance
  • Political Geography: United States, China, Europe, Colombia
  • Author: Nathan M. Jensen, Jeremy Caddel
  • Publication Date: 03-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Foreign direct investors increasingly use investment dispute-settlement mechanisms to resolve investment disputes and reduce political risk. Using data from the International Centre for Settlement of Investment Disputes (ICSID), the major forum of international investment arbitration, we cataloged the government actors involved in disputes and the actions that led to arbitration. Existing case-based studies of investment arbitration have provided general inferences about the actors involved, but we contribute to the literature in political science and economics by systematically documenting these patterns of behavior.
  • Topic: Economics, International Trade and Finance, Foreign Direct Investment, Governance
  • Author: Karl P. Sauvant, Victor Z. Chen
  • Publication Date: 05-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: China's rising outward foreign direct investment (OFDI) faces rising skepticism abroad. This is partly the result of the leading role of state-owned enterprises in her OFDI (and the fear that it serves non-commercial purposes), the speed with which this investment has grown, the negative image of the home country in some quarters, and the challenges it poses to established competitors. Moreover, Chinese multinational enterprises (MNEs) may not always keep in mind that host countries see FDI as a tool to advance their own development and hence seek maximum benefits from it.
  • Topic: Economics, International Trade and Finance, Foreign Direct Investment
  • Political Geography: China, Asia
  • Author: Miguel Pérez Ludeña
  • Publication Date: 05-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Multinational enterprises (MNEs) multiplied their profits made in developing countries by four between 2002 and 2011 (at current prices). In Latin America and the Caribbean, they rose from US$20 billion in 2002 to US$113 billion in 2011. The growth rate has been even higher in Africa and China, but much lower in developed countries. This rise is explained by an increase in FDI stock in developing economies and the higher average profitability of MNEs.
  • Topic: Economics, International Trade and Finance, Foreign Direct Investment
  • Political Geography: Africa, China, Latin America
  • Author: Louis T. Wells
  • Publication Date: 02-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: A recent Perspective concluded that, in countries given to sudden shifts in policy, "a host country government equity stake in a project may decrease project risk by giving the state a reason not to demand a renegotiation." An investor may benefit, but does the host country? In my experience, rarely.
  • Topic: Development, Economics, International Trade and Finance, Foreign Direct Investment
  • Author: Rainer Geiger
  • Publication Date: 04-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Launched in July 2013 by the European Union and the United States, the Transatlantic Trade and Investment Partnership (TTIP) represents an important effort to reach a comprehensive economic agreement between two major trading partners. As has been pointed out, the project offers great opportunities for liberalizing trade and investment and regulatory convergence. Its level of ambition implies high risks, but despite negotiators' initial optimism, its success is far from certain.
  • Topic: Economics, International Trade and Finance, Treaties and Agreements, Foreign Direct Investment
  • Political Geography: United States, Europe
  • Author: John Gaffney, James Nicholson
  • Publication Date: 06-2014
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: In their contribution to the FDI Perspectives series, Baiju Vasani and Anastasiya Ugale drew attention to an emerging trend in favor of the so-called "costs follow the event" (CFtE) (or loser pays) approach, which is in contrast to the more "traditional" approach under which parties share the costs of arbitration equally, with each party covering its own legal fees.
  • Topic: Economics, International Trade and Finance, Foreign Direct Investment
  • Author: Catharine Titi
  • Publication Date: 01-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: In July 2012, in an internal document, the European Commission's Directorate-General for Trade suggested that future EU investment agreement s (EUIAs) should incorporate regulatory flexibility in the same way in which EU free trade agreements (FTAs) safeguard parties' policy space. Since it is expected that a number of treaties on the EU's negotiating agenda will be concluded in the near future, and given the policy shift that has already taken place in Canada and the US, it is time to start thinking about a new balance in a move away from investment treaties' traditional laissez-faire liberalism toward WTO law's embedded liberalism, a model whereby liberalization is embedded within a wider framework that enables public regulation in the interest of domestic stability.
  • Topic: Economics, Globalization, International Trade and Finance, World Trade Organization, Foreign Direct Investment
  • Political Geography: Europe, Canada
  • Author: Nicolle Graugnard
  • Publication Date: 09-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Business needs a stable and predictable investment environment, especially in times of economic uncertainty, to continue to generate employment and create wealth. Although foreign direct investment (FDI) flows rose for two years after plummeting in the wake of the global financial crisis, they fell again by 18% to US$ 1.4 trillion in 2012. According to UNCTAD, the major factors contributing to this sharp decline were economic fragility and policy uncertainty in several economies. Moreover, investment regulations classified as “restrictive” rose to 25% in 2012, compared to just 6% in 2000; “liberalizing” regulations were 75 % of the total in 2012, compared to 94% in 2000. The result of these regulations is, therefore, not surprising: businesses are holding back on new investments, with multinational enterprises reporting record cash-holdings of between US$ 4 to 5 trillion.
  • Topic: Development, Economics, International Cooperation, International Trade and Finance, Foreign Direct Investment, Governance
  • Author: Axel Berger
  • Publication Date: 08-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: One of the recurrent debates on international investment rule-making relates to the question whether it is possible to establish a multilateral framework for investment (MFI). Proponents argue that growing foreign direct investment (FDI) from emerging countries, especially China, contributes to a new consensus on global investment rules.
  • Topic: Economics, Globalization, International Trade and Finance, Regional Cooperation, Foreign Direct Investment
  • Political Geography: China
  • Author: Karl P. Sauvant, Federico Ortino.
  • Publication Date: 08-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Discussions on a multilateral investment framework have recently seen a revival, as the International Chamber of Commerce, the World Economic Forum and various authors have called for negotiations on this subject. A growing number of countries have been reviewing and adapting their international investment policies. This reflects dissatisfaction with the current international investment law regime, and a desire to improve it.
  • Topic: Economics, International Law, International Trade and Finance, Foreign Direct Investment
  • Author: Baiju S. Vasani, Anastasiya Ugale
  • Publication Date: 07-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: In 2006, the Thunderbird tribunal, operating under the UNCITRAL Arbitration Rules, called for the harmonization of cost-allocation approaches in commercial and investment arbitration. Subsequent tribunals appear to be heeding Thunderbird's call paving a trend in favor of the so-called “costs follow the event” (CFtE) approach and its variations. Generally, this approach prescribes the shifting of arbitral costs and reasonable legal fees to the unsuccessful party (or based on parties' relative success) and has historically been prevalent in commercial arbitration. By contrast, the more traditional approach in investment arbitration has been to share the costs of arbitration equally, save for special circumstances, with each party covering its own legal fees (traditional approach). In the wake of what appears to be an emerging trend in favor of a default CFtE custom, it is time to revisit the idea of whet her a single harmonized approach to cost allocation is really appropriate. We suggest that it most likely is not.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance, Foreign Direct Investment
  • Author: Marino Baldi
  • Publication Date: 09-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Traditional bilateral investment treaties (BITs) focus on investment protection, i.e., regulate post-establishment aspects of foreign investment. In recent times, investment agreements have increasingly been supplemented with liberalization rules and also clauses on, e.g., key personnel, labor rights and sustainable development. Such integrated investment accords have notably become part of preferential trade agreements (PTAs). This trend started with NAFTA, continued with the negotiations on a Multilateral Agreement on Investment (MAI), and has in the course of the past ten years increasingly characterized PTAs throughout the world. The rapid proliferation of PTAs has, in the investment field, unfortunately led to lower quality provisions. Many of these treaties contain such wide-ranging exceptions and vaguely formulated safeguard clauses that their regulatory value as regards the protection of foreign investments in their post-establishment phase is called into question.
  • Topic: Development, Economics, International Trade and Finance, Foreign Direct Investment
  • Author: Barclay E. James, Paul M. Vaaler.
  • Publication Date: 12-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Business researchers, executives and regulators may assume that state ownership in firms raises risk for private co-investors. After all, private investors are seeking profits while states are seeking welfare. Giving them both equity only confuses the aims of an investment project, complicates the job of investment project managers and raises the overall risk of investment project failure. But these assumptions do not fit the evidence as demonstrated by a well-known risk indicator observable in hundreds of investment projects located in dozens o f countries: in countries where initial investment terms are more vulnerable to renegotiation by host country governments, we found that "minority rules" apply w hereby a non-controlling, but still substantial equity investment by a host country government can play a risk-mitigating role.
  • Topic: Markets, Treaties and Agreements, Foreign Direct Investment, Governance, Reform
  • Political Geography: Ethiopia
  • Author: Gus Van Harten
  • Publication Date: 12-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Investment treaty arbitration has unfolded rapidly in recent years. Some observations arising from analyses of arbitrator awards are high lighted below. They support broad conclusions that: arbitrators reviewed a wide range of legislative, executive and judicial decisions but typically did not exercise judicial restraint in various ways associated with domestic and international courts; arbitrators typically adopted expansive approaches to their authority and to investor entitlements to compensation, especially where the claimant had the nationality of a major Western capital-exporting state; and decision-making power was highly concentrated amongarbitrators, suggesting a need for closer scrutiny of how the most active individual arbitrators have expanded the meaning of investment treaties and corresponding principles of state liability.
  • Topic: Economics, International Trade and Finance, Markets, Treaties and Agreements, Foreign Direct Investment, Law Enforcement, Law
  • Author: Nikia Clarke
  • Publication Date: 11-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Energy investments and infrastructure contracts remain prominent in China's Africa engagement. However, investment in manufacturing makes up a significant proportion of Chinese outward foreign direct investment (FDI). Its characteristics–large numbers of smaller transactions by privately owned small and medium-sized firms–make these flows difficult to assess or control. However, China and African governments have an interest in effectively channeling this type of FDI.
  • Topic: Development, Economics, Industrial Policy, International Trade and Finance, Markets, Foreign Direct Investment
  • Political Geography: Africa, China
  • Author: Karl P. Sauvant
  • Publication Date: 10-2013
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Since China adopted its "going out" policy in 2001, her outward foreign direct investment (OFDI) flows have grown rapidly, reaching US$84 billion in 2012 (although the stock remains small). That year, China was the world's third largest outward investor (after the US and Japan). This performance raises all sorts of issues, especially because state-owned enterprises (SOEs) control some three-quarters of the country's OFDI stock. Three challenges are addressed in this Perspective.
  • Topic: Development, Economics, Emerging Markets, Foreign Direct Investment
  • Political Geography: United States, Japan, China
  • Author: Seev Hirsch
  • Publication Date: 01-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The purpose of this Perspective is to explore the relationship between multinational enterprises (MNEs) and their home countries. I use the term “nationality” when discussing a home country, to stress the contrast with “multinationality” which refers to business enterprises. The question I seek to address is whether, ceteris paribus, nation states have an economic interest in becoming home countries to MNEs. This is not a trivial question, bearing in mind that in many countries -- especially those with emerging markets -- outward foreign direct investment (FDI) has been frowned upon long after incoming FDI was generally welcome by local governments and academic scholars.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance, Political Economy, Foreign Direct Investment
  • Author: Tadahiro Asami
  • Publication Date: 01-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The Business and Industry Advisory Committee to the OECD (BIAC) has accepted the updated OECD Guidelines for Multinational Enterprises (Guidelines), adopted on May 25, 2011 after a series of negotiations and consultations among members of the Organisation for Economic Cooperation and Development (OECD), adhering governments, BIAC, the Trade Union Advisory Committee to the OECD, and OECD Watch, an international network of civil society organizations. The Guidelines are the most comprehensive government-endorsed code of responsible business conduct. The Update upheld the voluntary and non-legally binding character of the Guidelines, and while the new text introduces important new elements, the Update is very carefully formulated and its changes are accompanied by extensive conditionalities.
  • Topic: Development, Economics, International Cooperation, International Trade and Finance, Markets, Foreign Direct Investment
  • Author: Mira Wilkins
  • Publication Date: 01-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: In a recent Perspective, Beugelsdijk, Hennart, Slangen, and Smeets warned readers about biases in the measure of FDI stock. They are to be congratulated for pushing readers to be careful in the use of data.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance, Foreign Direct Investment
  • Author: Miguel Pérez Ludeña
  • Publication Date: 03-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Chinese foreign direct investment (FDI) in Latin America is a recent phenomenon. Although the China National Petroleum Corporation and other companies have been present in Peru, Ecuador and Venezuela since the early 1990s, large projects have been pursued only since 2006, following an extended period of high commodity prices. The Economic Commission for Latin America and the Caribbean (ECLAC) estimated that there were US$ 15 billion of Chinese FDI inflows into Latin America in 2010, 90% of which were in extractive industries. This further contributed to the already high percentage of Chinese FDI flows to the region that are in natural resources. At a time of high economic growth fueled by commodity exports and strong currency appreciation (particularly in Brazil), FDI into extractive industries strengthens the region's specialization in primary products at the expense of manufacturing and other activities.
  • Topic: Economics, International Trade and Finance, Markets, Natural Resources, Foreign Direct Investment
  • Political Geography: China, Brazil, Latin America, Peru
  • Author: Karl P. Sauvant, Chen Zhao, Xiaoying Huo
  • Publication Date: 03-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Among developing countries, China attracts most foreign direct investment (FDI). Where is this investment located within China, what explains its distribution and what are policy implications? We used UNCTAD's FDI Performance Index to answer the first question. Although developed for countries , it can be applied to sub-national units. It uses provincial GDP to ascertain whether a given territorial unit has received FDI inflows as expected from its economic size. Standardizing the data accordingly reveals three clusters of provinces for 2007-2010 (table 1, figure 1 below): The first cluster encompasses virtually all coastal provinces: they have an index value above 1, i.e. perform better than their economic size would lead one to expect. They account for 9 of the top 11 performers of Mainland China's 31 provinces, municipalities and autonomous regions (“provinces”). The provinces in the middle cluster underperform (index value of 1-0.5). They include 5 central provinces, but also 3 western and 2 coastal provinces. The provinces in the bottom cluster underperform significantly (index value below 0.5), comprising primarily the country's western provinces (8 out of the 10 provinces in this cluster).
  • Topic: Development, Economics, International Trade and Finance, Markets, Foreign Direct Investment
  • Political Geography: China
  • Author: Clint Peinhardt, Todd Allee
  • Publication Date: 02-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The proliferation of investment treaties is perhaps exceeded only by academic studies of those treaties. Legal scholarship has long been attentive to the evolution in international investment agreement (IIA) content -- but until recently, quantitative assessments of IIAs have tended to treat them as interchangeable: the only measure of investor protections encoded in IIAs is whether a treaty had been signed and/or entered into force. Thankfully, the United Nations Conference on Trade and Development has been at the forefront of capturing not just IIAs' proliferation but also the evolution in their content. Its work shows that treaties apply for differing durations, have conflicting procedures for termination and include varying definitions of even basic terms, such as “investors” and “investment.” Other quantitative studies have begun to measure these variations, focusing initially on differences in dispute resolution. 1 Some IIAs demand that investors choose between domestic and international dispute resolution; some provide explicit consent of both parties to international arbitration; and some designate a particular forum for arbitration, whereas others specify multiple options. Of course, IIAs vary across many dimensions, but our initial examination of dispute resolution provisions alone demonstrates the importance of examining IIA content.
  • Topic: Economics, International Trade and Finance, Markets, Treaties and Agreements, Foreign Direct Investment
  • Political Geography: United Nations
  • Author: Alice H. Amsden
  • Publication Date: 02-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: A priori, is there a growth/efficiency justification for government programs designed to support and promote national companies (public and private) as opposed to, and in competition with, opening the doors to multinational enterprises (MNEs)? In competitive markets, there should be no difference. Where national companies close in capabilities to foreign affiliates do not exist, foreign direct investment (FDI) may stimulate development, if a country is lucky enough to attract it. But in the imperfect markets that characterize the BRICs and other emerging markets, where foreign affiliates may crowd out excellent but inexperienced national firms, the question arises as to which type of enterprise policy makers should encourage for the long run. Historically, policy makers used tariffs to promote national firms (a “race to the bottom”). Today they use investments in science and technology (a “race to the top”).
  • Topic: Economics, International Trade and Finance, Markets, Foreign Direct Investment
  • Author: Gus Van Harten
  • Publication Date: 02-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Investment arbitration has a remarkably poor record on representation of women. This calls for reform of the appointments process for arbitrators, who make important policy choices in the context of global governance.
  • Topic: Economics, Gender Issues, International Trade and Finance, Foreign Direct Investment
  • Political Geography: Europe
  • Author: Stephan W. Schill
  • Publication Date: 01-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: At the heart of the so-called “legitimacy crisis” of international investment law, prominently reflected in the Public Statement on the International Investment Regime, is what I call the public law challenge. It builds on the observation that one-off appointed arbitrators, instead of standing courts, review government acts and reach far into the sphere of domestic public law by crafting and refining the standards governing in vestor-state relations. Arbitrations against Uruguay and Australia concerning cigarette packaging are the most recent examples of genuinely public law disputes now settled in arbitration. The disputes about Argentina's emergency legislation and Canada's ban on pesticide s are others. These arbitrations create friction with domestic public law as arbitrators, having little democratic legitimacy, often operate in non-transparent proceedings and produce increasing amounts of incoherent decisions.
  • Topic: Economics, International Law, International Trade and Finance, Markets, Foreign Direct Investment
  • Political Geography: Canada, Argentina, Australia
  • Author: Nathan M. Jensen, Persephone Economou, Paul Antony Barbour, Daniel Villar
  • Publication Date: 05-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The events of the Arab Spring have dramatically increased the risk perceptions of foreign investors. In directly affected countries, these events led to disruptions in economic activity including plummeting tourism and foreign direct investment (FDI) flows, all of which negatively impacted economic growth. While the economic impact was uneven across the Middle East and North Africa (MENA) region, for the region's developing countries the growth rate assumption underpinning survey analysis in the Multilateral Investment Guarantee Agency's (MIGA's) World Investment and Political Risk Report for 2011 was 1.7%. How much will these developments affect future FDI?
  • Topic: Political Violence, Regime Change, Foreign Aid, Fragile/Failed State, Foreign Direct Investment
  • Political Geography: Middle East, Arabia, North Africa
  • Author: Mark Feldman
  • Publication Date: 04-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The ICSID Convention, under Article 25(1), applies only to those investment disputes that are between a contracting state and a “national” of another contracting state. Given that limitation, and in light of the significant and growing amount of foreign investment by state-controlled entities (SCEs), ICSID tribunals likely will need to address one fundamental issue with greater frequency: whether disputes arising from SCE investments constitute investor-state disputes falling within, or state-to-state disputes falling outside of, the scope of the ICSID Convention.
  • Topic: Development, Economics, Markets, Foreign Direct Investment, Governance
  • Author: Karl P. Sauvant, Jonathan Strauss
  • Publication Date: 04-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Developing country sovereign wealth funds (SWFs) as players in the world foreign direct investment (FDI) market have received considerable attention. While outward FDI from emerging markets has indeed risen dramatically, that by SWFs has been negligible: their outward FDI stock is around US$ 100 billion (compared to a world FDI stock of US$ 20 trillion in 2010).
  • Topic: Development, Economics, Emerging Markets, Government, International Law, Foreign Direct Investment
  • Political Geography: United States
  • Author: Terutomo Ozawa
  • Publication Date: 05-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: This is a reply to Francisco Sercovich's commentary on my Perspective on FDI-led industrial takeoff in which I described foreign direct investment (FDI) as an ignition for catch-up industrialization. He emphasized "the rich and nuanced variety of strategic options" (e.g., S policies, engineering education, chaebol-type enterprises for technology absorption, R capabilities), which are, however, relevant only to higher-stages of catch-up, but notto the kick-off stage with which my previous Perspective was concerned. Economic development derives from structural changes at different stages of growth, requiring stages-focused strategies.
  • Topic: Development, Economics, International Trade and Finance, Markets, Foreign Direct Investment
  • Author: Sophie Meunier
  • Publication Date: 05-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: China is investing throughout the world, in industries from automobiles to zinc. In the US, Chinese foreign direct investment (FDI) accounted for only 0.25% of total FDI stock in 2010,but it is likely to increase as China diversifies its holdings and seeks to obtain technology, managerial know-how and easier access to US consumers. As these investments multiply, we expect a few cases to attract negative attention in the media and political arena. Chinese companies are predominately state-controlled, raising the specter that they act to fulfill strategic, rather than profit maximizing, goals. China is also an ideological rival, causing irrational concern that Chinese investment in the US may act as a Trojan Horse of Chinese values and politics --fueled by rational concerns about subsidies, piracy, and economic espionage.
  • Topic: Economics, International Trade and Finance, Foreign Direct Investment
  • Political Geography: United States, China
  • Author: Ilan Alon, Aleh Cherp
  • Publication Date: 10-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The motivations prompting China's dramatic increase in outward foreign direct investment (OFDI) are not always clear, especially regarding OFDI by state-owned enterprises (SOEs) in energy and natural resources. First, both commercial and governmental interests are intertwined, although not necessarily in lock-step. Chinese SOEs listed in the West may worry about the reputational risks to their global corporate citizenship, while government stakeholders may instead focus on diplomatic international relations. Second, subsidies for oil investments may be viewed as serving Chinese national interests and threatening the national security of the host countries. Whether China's OFDI will benefit or harm global energy security, economic development and diplomatic relations is still hotly contested.
  • Topic: Economics, Emerging Markets, Energy Policy, International Trade and Finance, Oil, Foreign Direct Investment
  • Political Geography: China
  • Author: Jo En Low
  • Publication Date: 10-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: A review of the definition of “investor” and investor-state dispute resolution clauses in 851 international investment agreements (IIAs) reveals that, except in two, state controlled entities (SCEs) (sovereign wealth funds and state-owned enterprises (SOEs)) have equivalent standing to their purely private counterparts as investors under such IIAs.
  • Topic: Economics, Emerging Markets, International Trade and Finance, Markets, Foreign Direct Investment
  • Author: Lise Johnson
  • Publication Date: 09-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: As UNCTAD highlighted over a decade ago and again recently in its Investment Policy Framework for Sustainable Development, home-country measures (HCMs), like host-country commitments regarding the protection of foreign investors, are tools of promoting foreign investment. Nevertheless, the vast bulk of investment treaties, which state the promotion of foreign investment as their objective, overlook the potential role of HCMs and focus rather singularly on setting out the obligations of host countries regarding the treatment of foreign investors. Even recent agreements and model investment treaties that should represent “next generation” practices incorporating accumulated learning about the impacts and effectiveness of these treaties remain relatively devoid of any obligation for governments to facilitate or promote the quantity and quality of outward investment that many countries want and need for sustainable development.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance, Markets, Foreign Aid, Foreign Direct Investment
  • Author: Elizabeth L. Broomfield
  • Publication Date: 09-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: There is currently no universal framework governing capital controls. As a result, a conflict has arisen due to the different approaches taken by various international organizations and many international investment agreements (IIAs). In particular, the International Monetary Fund (IMF) -- established to manage the international financial system -- preserves national autonomy over capital controls when such measures are deemed necessary; in contrast, IIAs, and especially bilateral investment treaties (BITs) -- crafted primarily to protect investors -- typically do not allow for the imposition of restrictions on capital outflows associated with foreign investments for balance-of-payments reasons.
  • Topic: Development, Economics, International Monetary Fund, Foreign Aid, Foreign Direct Investment, Financial Crisis
  • Author: Sandy Walker
  • Publication Date: 08-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: In its World Investment Report 2011, UNCTAD reported that liberalizing investment policy measures taken globally in 2010 outnumbered restrictive measures. Without the benefit of statistics, investors might have drawn the opposite conclusion, witnessing what appears to be a rising tide of national resistance to foreign takeovers: the Australian Foreign Investment Review Board's rejection of a takeover of the Australian Securities Exchange by the Singapore Exchange, Italian concern over a French company's takeover of dairy giant Parmalat and the US Government's requirement that Chinese company Huawei divest certain assets it had acquired from 3Leaf.
  • Topic: Economics, International Trade and Finance, Markets, Foreign Direct Investment
  • Political Geography: United States, China, Canada, Australia, Singapore
  • Author: Julien Topal, Perrine Toledano
  • Publication Date: 08-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Transparency demands in extractive industries are tied to the complex paradoxical correlation between significant resource endowment and poverty in many resource dependent countries. Citizens of these countries and international investors alike only have limited means to scrutinize money-flows between governments and companies, disrupting accountability mechanisms.
  • Topic: Economics, International Trade and Finance, Markets, Foreign Direct Investment
  • Author: Peter Nunnenkamp, Martin Roy, Axel Berger, Matthias Busse
  • Publication Date: 07-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: It may appear all too obvious that the extent to which foreign direct investment (FDI) is attracted by bilateral investment treaties (BITs) and regional trade agreements (RTAs) depends on the strength of key investment provisions. Still, BITs and RTAs have typically been treated as black boxes in prior empirical literature, ignoring two important legal innovations: investor-state dispute settlement (ISDS) and pre-establishment national treatment (NT) provisions.
  • Topic: Economics, International Trade and Finance, Foreign Direct Investment
  • Author: Lorenzo Cotula
  • Publication Date: 06-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Foreign investment in developing countries' natural resources brings into contact competing interests characterized by an unequal balance of negotiating power -- from multinational enterprises and host governments to people affected by the implementation of investment projects. Economic globalization has been accompanied by extensive developments in national and international norms regulating investment and its impact -- including investment law, natural resource law and human rights law. These norms affect the way the costs, risks and benefits of investments are shared among the multiple parties involved.
  • Topic: Development, Economics, Emerging Markets, International Law, Foreign Direct Investment, Law
  • Author: Torfinn Harding, Beata Javorcik
  • Publication Date: 06-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Foreign direct investment flows to developing countries are hindered by many factors. Two of these factors -- the mere lack of information and red tape -- could be easily remedied through investment promotion efforts.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance, Markets, Foreign Direct Investment
  • Author: Thomas Jost
  • Publication Date: 06-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The rise of sovereign wealth funds (SWFs) and state-owned enterprises (SOEs) -- together state-controlled entities (SCEs) -- has led to concerns that SCEs could threaten national security by following political rather than mere commercial goals with respect to their foreign direct investment (FDI). While developed countries acknowledged that the rise of SCEs should not lead to new barriers to FDI, several have changed their legislation to expand government oversight of FDI flows. In 2009, Germany also tightened its foreign investment regime. What are the first experiences with this change in German investment law?
  • Topic: Economics, Markets, Foreign Direct Investment, Law
  • Political Geography: Europe, Germany
  • Author: Karl P. Sauvant, Huiping Chen
  • Publication Date: 12-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: China is the largest foreign direct investment (FDI) host and home country among emerging markets, the United States among developed countries. As host countries, both seek to maintain policy space to pursue their own legitimate public policy objectives; as home countries, both seek to protect their investors' outward FDI. The development of their bilateral investment treaties (BITs) over the past decade reflects this: Chinese BITs have become more protective of investors, US ones more respectful of host country interests. If agreement is reached between both, it would provide a template for future investment agreements.
  • Topic: Economics, Emerging Markets, Treaties and Agreements, Foreign Direct Investment
  • Political Geography: United States, China
  • Author: Saurav Pathak, André Laplume, Emanuel Xavier-Oliveira
  • Publication Date: 12-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Whether or not foreign direct investment (FDI) is essential for domestic technological and economic development remains a contentious question. The controversy is illustrated by comparing the Celtic and Asian Tigers experiences from 1995 to 2000. Based on IMF and World Bank data in constant prices, Ireland and China averaged an annual growth rate of 8% in GDP per capita. However, FDI per capita grew at an average pace of 98% per year in Ireland, while in China it decreased by 1% -- absolute values averaged US$ 3,397 versus US$ 144, respectively. This suggests that, rather than a one-policy-fits-all approach, customized policies are more appropriate; and, if any generalization can be made, it should be based on a country's stage of economic development.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance, Foreign Direct Investment
  • Political Geography: Israel, Asia
  • Author: John M. Kline
  • Publication Date: 11-2012
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Prescriptions to increase the role of FDI in promoting sustainable development generally focus on the macro level -- getting policies right and otherwise improving the investment climate. These steps are necessary but not sufficient. Effective implementation processes, especially at the micro project level, are also essential to encourage FDI that matches host country development needs and priorities.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance, Foreign Direct Investment
  • Author: Gert Bruche
  • Publication Date: 07-2011
  • Content Type: Policy Brief
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: The growth of outward foreign direct investment (FDI) from developing countries and of a new generation of “emerging multinational enterprises” (EMNEs) has stimulated a flurry of publications. EMNEs have been portrayed as on their way to adulthood, latecomers that leapfrog into advanced positions, emerging giants, and challengers of conventional multinational enterprises (MNEs) from advanced economies.
  • Topic: Development, Economics, Foreign Direct Investment
  • Political Geography: South Asia, India