Tensions over foreign direct investment (readings summary)

Résumé du document

Foreign Direct Investment or FDI appears as a complex mechanism in which numerous and evolving issues are at stake. The first source of complexity lies in the numerous interests that may be pursued by the different actors involved. As the authors underline, the convergence of these interests is often very important at the beginning of a given process of FDI, but they are definitely diminishing over time. In that sense, the adequate management of time is essential for the successful implementation of an FDI operation. In other words, the dealing with the evolving nature of FDI seems to be one of its greatest challenges. This article describes FDI as a process composed of different stages, all of which have different implications and require different approaches to solve them.

Extraits

[...] These different stages can not be ignored. Unless both parties do not take steps to adapt their relationship to these stages, the initial positive impact of FDI on the host country can de facto turn out to be a process of domination. In other words, FDI in itself is positive for less developed countries (by being self-sufficient such countries would condemn themselves to underdevelopment). Yet, it can become dangerous and lead to situations in which the whole economic system of a given country is controlled by investors. [...]

[...] Indeed, FDI appears as a complex mechanism in which numerous and evolving issues are at stake. The first source of complexity lies in the numerous interests that may be pursued by the different actors involved. As the authors underline, the convergence of these interests is often very important at the beginning of a given process of FDI, but it is definitely diminishing over time. In that sense, the adequate management of time is essential for the success of an FDI operation. [...]

[...] This possibility to renegotiate should not be limited to the occurrence of unforeseen economic conditions but also to the evolution of the host state's situation. The preservation of the mutuality of benefits should be the underlying concern of parties entering into investment agreements. In FDI process, parties should ensure that most benefits would not be going to the foreign investor but that the investment would also help to an effective economic development of the host country. In that sense, FDI should be regarded as a give and take relationship. [...]

[...] The definition of neutral mechanisms of potential dispute resolution is certainly another powerful tool to achieve such an aim. The same could be said about the implementation of a system of accountability to a neutral, multinational body. Bibliography J.J. Servan-Schreiber, The American Challenge, p. 3-30, 153-156 (1968) R. Vernon, The Multilateral Entreprise: Power Versus Sovereignty Foreign Affairs 736 (1971) O. Sunkel, Big Business and “Dependencia” 50 Foreign Affairs 517 (1972) P. Kuruk, “Renegotiation Transnational Investment Agreements: Lessons for Developing Countries from Ghana-Valco Experience” Mich. [...]

[...] Relying only on the immediate benefits of FDI would be short-sighted and even dangerous for an host country's economy. In his article, Servan-Schreiber warns Europe against a potential passivity after the occurrence of the first positive consequences of American investments in Europe after WWII[1]. He develops many steps that could have been taken in order to take full advantage of American investments. Servan-Schreiber, among others, insisted on the necessity for the Common Market to transform itself into a political entity that would be able to speak the same voice on the international scene. [...]