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201. Inward FDI in the United States and its policy context

Author:
Lucyna Kornecki
Publication Date:
02-2013
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
Inward foreign direct investment (IFDI) represents an integral part of the United States (U.S.) economy, with its stock growing from US$ 83 billion in 1980 to US$ 3.5 trillion in 2011. The United States, which had earlier been primarily a home for multinational enterprises (MNEs) rather than a host for affiliates of foreign MNEs, has become a preferred host country for FDI since the 1980s. Foreign MNEs have contributed robust flows of FDI into diverse industries of the U.S. economy, and total FDI inflows reached US$227 billion in 2011, equivalent to 15% of global inflows, the single largest share of any economy. Inflows of FDI, with a peak of US$ 314 billion in 2000 and another of US$ 306 billion in 2008, have been an important factor contributing to sustained economic growth in the United States. The recent financial and economic crises negatively impacted FDI flows to the United States and opened a period of major uncertainty. The effectiveness of government policy responses at both the national and international levels in addressing the financial crisis and its economic consequences will play a crucial role for creating favorable conditions for a rebound in FDI inflows.
Topic:
Economics, Human Rights, International Trade and Finance, Foreign Direct Investment, and Governance
Political Geography:
United States and North America

202. On Returns Differentials

Author:
Stephanie E. Curcuru, Charles Thomas, and Francis E. Warnock
Publication Date:
04-2013
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Estimates of U.S. returns differentials have ranged from exorbitant to quite small, in part because of their volatility coupled with the relatively short time series available. We shed light on underlying drivers of returns differentials by presenting a number of decompositions: a by-asset-class decomposition into yields and capital gains, the Gourinchas and Rey (2007a) composition and return effects, and further decompositions of capital gains that focus on exchange rate effects. While each decomposition informs thinking about returns differentials, one constant is evident throughout: to date the existing differential favoring the U.S. has owed primarily to one factor, a differential in direct investment yields. We discuss how our analysis informs the income puzzle (of positive net income flows to the U.S. even as its net international investment position is negative and substantial) and the position puzzle (of a sizeable gap between the reported U.S. net international position and cumulated current account deficits), provide an initial assessment of the literature on the dynamics of returns differentials, and present a framework to guide a forward-looking view of how returns differentials might evolve in the future.
Topic:
Foreign Direct Investment, Financial Markets, Investment, and Stock Markets
Political Geography:
North America and United States of America

203. Portfolio Diversification and the Cross-Sectional Distribution of Foreign Investment

Author:
Alexandra Tabova
Publication Date:
11-2013
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In this paper I explore the role of portfolio diversification in explaining the distribution of foreign investment across countries. I capture the portfolio diversification motive by a measure of country-specific riskiness, "covariance risk", which I construct as how countries' growth rates covary with the stochastic discount factor of a representative international investor. My key new empirical finding is a strong and significant correlation between this new measure of country riskiness and foreign investment allocations. Less risky countries, i.e. countries whose growth rates are more highly correlated with the investor's stochastic discount factor, receive larger investment shares than more risky countries. I interpret this result as evidence that investors do take into account diversification opportunities, not only for portfolio investment decisions, but also for foreign direct investment decisions. My empirical results confirm the theoretical predictions of standard portfolio allocation models.
Topic:
Foreign Direct Investment, Investment, Risk, Fiscal Policy, Securities, and Stock Markets
Political Geography:
Global Focus

204. Due Diligence: An Impertinent Inquiry into Microfinance

Author:
David Roodman
Publication Date:
01-2012
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
Microfinance: Few development ideas have been so buoyed by high expectations in recent decades, and few have been so buffeted by difficulties in recent years. Images of microfinance lifting people out of poverty now compete with ones of the poor driven by debt to suicide. Where does the truth lie? David Roodman investigates in Due Diligence. He finds no evidence that small loans lift people out of poverty en masse but argues that financial services, like clean water and electricity, are essential to a modern life. The practical question is not whether microfinance should continue, but how it can play to its strengths, which lie in providing useful services to millions of poor people in a businesslike way. Due Diligence is the most complete investigation ever into the sources and consequences of microfinance. Rood - man explores the financial needs of poor people, the history of efforts to meet those needs, the business realities of doing so, and the arguments and evidence about how well modern microfinance is succeeding.
Topic:
Debt, Development, Economics, Globalization, Poverty, and Foreign Direct Investment

205. The Emergence of China in the Middle East

Author:
James Chen
Publication Date:
01-2012
Content Type:
Working Paper
Abstract:
During the 9th century, Arab traders regularly plied lucrative maritime routes that connected the Persian Gulf to southern China by way of the Indian Ocean. This commercial activity, which mostly involved jade, silk, and other luxury goods, went on for centuries and became part of what is now known as the Silk Road. In some ways, the world is now witnessing a restoration of that ancient trading relationship between two civilizations—except that oil and consumer goods have replaced jade and silk.
Topic:
Foreign Policy, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
China, Middle East, and Arabia

206. Credit-constrained in Risky Activities? The Determinants of the Capital Stocks of Micro and Small Firms in Western Africa

Author:
Jann Lay, Michael Grimm, and Simon Lange
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
Micro and small enterprises (MSEs) in developing countries are typically considered to be severely credit constrained. Additionally, high business risks may partly explain why the capital stocks of MSEs remain low. This article analyzes the determinants of the capital stocks of MSEs in poor economies focusing on credit constraints and risk. The analysis is based on a unique, albeit cross-sectional but backward-looking, micro data set on MSEs covering the economic capitals of seven West-African countries. The main result is that capital market imperfections indeed seem to explain an important part of the variation in capital stocks in the early lifetime of MSEs. Furthermore, the analyses show that risk plays a key role in capital accumulation. Risk-averse individuals seem to adjust their initially low capital stocks upwards when enterprises grow older. MSEs in risky activities owned by wealthy individuals even seem to over-invest when they start their business and subsequently adjust capital stocks downwards. As other firms simultaneously suffer from capital shortages, such behaviour may imply large inefficiencies.
Topic:
Development, Economics, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
West Africa

207. Nation states and nationality of MNEs

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, and Foreign Direct Investment

208. Towards the successful implementation of the updated OECD Guidelines for Multinational Enterprises

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, and Foreign Direct Investment

209. FDI stocks are a biased measure of MNE affiliate activity: A response

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, and Foreign Direct Investment

210. Is China's outward investment in oil a global security concern?

Author:
Ilan Alon and 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, and Foreign Direct Investment
Political Geography:
China

211. State-controlled entities as "investors" under international investment agreements

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, and Foreign Direct Investment

212. Absent from the discussion: The other half of investment promotion

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, and Foreign Direct Investment

213. Reconciling IMF rules and international investment agreements: An innovative derogation for capital controls

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, and Financial Crisis

214. A new economic nationalism? Lessons from the PotashCorp decision in Canada

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, and Foreign Direct Investment
Political Geography:
United States, China, Canada, Australia, and Singapore

215. A good business reason to support mandatory transparency in extractive industries

Author:
Julien Topal and 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, and Foreign Direct Investment

216. Attracting FDI through BITs and RTAs: Does treaty content matter?

Author:
Peter Nunnenkamp, Martin Roy, Axel Berger, and 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, and Foreign Direct Investment

217. Law at two speeds: Legal frameworks regulating foreign investment in the global South

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, and Law

218. Roll out the red carpet and they will come: Investment promotion and FDI inflows

Author:
Torfinn Harding and 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, and Foreign Direct Investment

219. Much ado about nothing? State-controlled entities and the change in German investment law

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, and Law
Political Geography:
Europe and Germany

220. Poland: Industry Forecast

Publication Date:
08-2012
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
GDP is expected to rise by 2.6% in 2012 and expand by 2.7% in 2013. Over the next 10 years to 2021, GDP is predicted to grow on average by 3.2% a year. Manufacturing output growth is forecast to be higher than GDP growth over the next decade. Manufacturing output is expected to increase by 2.1% in 2012 and expand by 5.3% in 2013. Over the next 10 years to 2021, manufacturing output is expected to grow on average by 4.3% a year. As a result, the share of manufacturing output in GDP is projected to rise from 25.4% in 2011 to 27.2% by 2016 and increase to 28.7% by 2021. Over the same period, the share of service sector output in GDP is expected to decline from 58.5% in 2011 to 57.2% in 2016 and fall to 56.2% in 2021.
Topic:
Economics, Industrial Policy, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
Europe and Poland

221. China: Industry Forecast

Publication Date:
08-2012
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
GDP is expected to rise by 7.9% in 2012 and expand by 8.7% in 2013. Over the next 10 years to 2021, GDP is predicted to grow on average by 7.8% a year. Manufacturing output growth is forecast to be higher than GDP growth over the next decade. Manufacturing output is expected to increase by 8.8% in 2012 and expand by 9.4% in 2013. Over the next 10 years to 2021, manufacturing output is expected to grow on average by 7.9% a year. As a result, the share of manufacturing output in GDP is projected to rise from 34.0% in 2011 to 35.1% by 2016 and increase to 35.6% by 2021. Over the same period, the share of service sector output in GDP is expected to expand from 41.7% in 2011 to 43.8% in 2016 and rise to 45.5% in 2021.
Topic:
Economics, Industrial Policy, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
China and Israel

222. Country Economic Forecasts: Thailand

Publication Date:
05-2012
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
GDP expanded by 11% on the quarter in Q1 in seasonally adjusted terms, recovering strongly after contracting by more than 10% on the same basis in Q4 when flooding decimated the manufacturing sector. But compared with a year earlier, the economy expanded by just 0.3% in Q1, illustrating the scale of the catastrophe.
Topic:
Economics, International Trade and Finance, Markets, Foreign Direct Investment, and Financial Crisis
Political Geography:
Thailand and Southeast Asia

223. Post-2015 Development Agenda: Goals, Targets and Indicators

Author:
Barry Carin, Nicole Bates-Eamer, Min Ha Lee, Wonhyuk Lim, and Mukesh Kapila
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
In September 2000, world leaders at the United Nations Millennium Summit recognized a collective responsibility to work toward “a more peaceful, prosperous and just world” (UN, 2000). The MDGs reaffirmed this vision and launched an ambitious global partnership for development, setting specific targets to be met by 2015 and using numerical indicators to measure progress. The MDGs recognized the stark reality of widespread human deprivation and environmental degradation, and galvanized support to reduce poverty, achieve basic education and health, and promote gender equality and environmental sustainability.
Topic:
Development, Economics, Humanitarian Aid, United Nations, Foreign Aid, and Foreign Direct Investment

224. Transformations on Whose Terms? Understanding the New EU-ACP Trade Relations from the Outside In

Author:
Ulrike Lorenz
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
The Kolleg-Forschergruppe (KFG)
Abstract:
In the past ten years, the long-standing trade relations between the European Union (EU) and the African, Caribbean, and Pacific (ACP) countries have experienced radical transformations. The negotiations of the Economic Partnership Agreements (EPAs) between the EU and seven regional groupings formed by the ACP countries have led to the EU being maneuvered into an unexpectedly weak position. For the first time, European negotiators had to substantially leave their pre-agreed negotiation path and positions due to the immense pressure from ACP countries, regional organizations, and non-state actors – and still have not been able to finalize negotiations that had initially been expected to only take five years until the end of 2007.
Topic:
Economics, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
Africa, Europe, Asia, Australia/Pacific, and Caribbean

225. Hoping to Win, Expected to Lose: Theory and Lessons on Microenterprise Development

Author:
Dean Karlan, Ryan Knight, and Christopher Udry
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
We show how financial and managerial constraints impede experimentation and thus limit learning about the profitability of investments. Imperfect information about one's own type, but willingness to experiment to learn one's type, leads to short-run negative expected returns to investments, with some outliers succeeding. We find in an experiment that entrepreneurs invest randomized grants of cash and adopt advice from randomized grants of consulting services, but both lead to lower profits on average. In the long run, they revert back to their prior scale of operations. In a meta-analysis, results from 19 other experiments find mixed support for this theory.
Topic:
Development, Economics, Markets, Foreign Aid, and Foreign Direct Investment
Political Geography:
Africa

226. Agricultural Decisions after Relaxing Credit and Risk Constraints

Author:
Dean Karlan, Robert Osei, Christopher Udry, and Isaac Osei-Akoto
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The investment decisions of small-scale farmers in developing countries are conditioned by the farmers' financial environment. Binding credit-market constraints and incomplete insurance can reduce investment in activities with high expected profits. We conducted several experiments in northern Ghana in which farmers were randomly assigned to receive cash grants, grants of or opportunities to purchase rainfall-index insurance, or a combination of the two. Demand for index insurance is strong, and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture. The salient constraint to farmer investment is uninsured risk: when provided with insurance against the primary catastrophic risk they face, farmers are able to find resources to increase expenditure on their farms. Demand for insurance in subsequent years is strongly increasing in a farmer's own receipt of insurance payouts, and with the receipt of payouts by others in the farmer's social network. Both investment patterns and the demand for index insurance are consistent with the presence of important basis risk associated with the index insurance, and with imperfect trust that promised payouts will be delivered.
Topic:
Agriculture, Economics, Markets, Food, and Foreign Direct Investment

227. Beyond the Millennium Development Goals Agreeing to a Post-2015 Development Framework

Author:
Alex Evans and David Steven
Publication Date:
04-2012
Content Type:
Working Paper
Institution:
Center on International Cooperation (CIC)
Abstract:
This paper provides an overview of the Millennium Development Goals (MDGs) and their expected status in 2012; describes the background to, and options for, a post-2015 framework; and discusses how governments can best navigate the political challenges of agreeing to a new set of development goals.
Topic:
International Relations, Development, Foreign Aid, and Foreign Direct Investment
Political Geography:
China

228. Better Rules for a Better Future: Regulating private sector agriculture

Author:
Maria Dolores Bernabe
Publication Date:
11-2012
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
The ASEAN Investment Report for 2011 considers 2010 as an important year for the region in terms of foreign direct investment (FDI) inflows. FDIs in ASEAN for the said year reached a record high of US 75.8 million dollars, nearly double the inflows in 2009. Included in these FDIs were private sector investments in agriculture, as Southeast Asia has become one of the most favored destinations of large-scale agricultural land investments.
Topic:
Security, Agriculture, Gender Issues, Food, and Foreign Direct Investment
Political Geography:
Southeast Asia

229. Transactions: A New Look at Services Sector Foreign Direct Investment in Asia

Author:
Jacob Funk Kirkegaard
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In this paper Kirkegaard presents new micro-level data consisting of individual greenfield investment projects and mergers and acquisitions as a source for detailed analysis of services sector cross-border investment flows among the Asian Development Bank (ADB) regional membership in Asia. The new transactional foreign direct investment (FDI) data are methodologically distinct from traditional BPM5-compliant FDI data but found to yield generally comparable aggregates, when compared with the latest available International Monetary Fund (IMF) data from the Comprehensive Direct Investment Survey for the ADB regional membership. The services sectors are found to receive considerably larger amounts of foreign investment, when compared with the Asian region's manufacturing and raw materials sectors. OECD countries account for roughly three-quarters of total recorded inward services sector FDI of about $2 trillion, relatively evenly split between the United States, the EU-27, and regional OECD-level-income countries. The presence of sizable regional "upward flowing" services sector investments into OECD-level-income economies is verified. Kirkegaard draws preliminary policy conclusions based on the new transactional FDI data results concerning prospects for regional services sector liberalization, threshold income levels for inward services sector FDI, upward-flowing regional services FDI, and preferred modes of services sector investments.
Topic:
Economics, Emerging Markets, International Trade and Finance, and Foreign Direct Investment
Political Geography:
United States, Israel, and Asia

230. A China – US bilateral investment treaty: A template for a multilateral framework for investment?

Author:
Karl P. Sauvant and 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, and Foreign Direct Investment
Political Geography:
United States and China

231. Inward foreign direct investment: Does it enable or constrain domestic technology entrepreneurship?

Author:
Saurav Pathak, André Laplume, and 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, and Foreign Direct Investment
Political Geography:
Israel and Asia

232. Evaluate Sustainable FDI to Promote Sustainable Development

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, and Foreign Direct Investment

233. China Reinterprets the Liberal Peace

Author:
Silvia Menegazzi
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
China's assertiveness is growing. While in the past China's foreign policy kept a low profile in international affairs, global developments, prime amongst which in the Middle East, highlight China's growing influence in world politics and its ensuing role in shaping global norms. Within the liberal peace discourse, China's reinterpretation of international norms can be seen as the result of a mixture of prior local norms - sovereignty and non-interference - and changes within the international environment - namely conflicts in North Africa and the Middle East. Particularly, in terms of intervention and peace-building practices, China insists that a number of preconditions - which are encapsulated in the notion of Responsible Protection (RP) - have to be met in order to consider intervention in sovereign states. This paper argues that in order to achieve a full picture of Chinese foreign policy and its normative underpinnings, it is necessary to explore the debate within non-state actors beyond the government apparatus, such as think tanks and research institutions.
Topic:
Foreign Policy, Emerging Markets, International Affairs, and Foreign Direct Investment
Political Geography:
China, Middle East, Libya, North Africa, and Syria

234. Africa: open for business The potential, challenges and risks

Publication Date:
02-2012
Content Type:
Working Paper
Abstract:
Africa is drawing increasing attention, not only from the perspective of businesses based in China and Europe, but also from operators in Africa itself. In particular, closer economic ties between Africa and China have been covered extensively by the media recently—with fairly mixed reviews. This paper highlights the potential, challenges and risks for doing business in Africa over the next few years.
Topic:
Development, International Trade and Finance, Markets, Foreign Aid, and Foreign Direct Investment
Political Geography:
Africa, China, and Europe

235. Cooperating with China in Africa

Publication Date:
02-2012
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
OECD donors, international organisations and non-governmental organisations are increasingly cooperating with China in Africa. This policy brief offers recommendations for policy-makers on how to lay the groundwork for such cooperation. It also stresses that the involvement of African partners is critical in fully realizing the benefits such cooperation can provide for sustainable development.
Topic:
Foreign Policy, Development, Diplomacy, Economics, Foreign Aid, and Foreign Direct Investment
Political Geography:
Africa and China

236. Burundi: A Deepening Corruption Crisis

Publication Date:
03-2012
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
Despite the establishment of anti-corruption agencies, Burundi is facing a deepening corruption crisis that threatens to jeopardise a peace that is based on development and economic growth bolstered by the state and driven by foreign investment. The “neopatrimonialist” practices of the party in office since 2005 has relegated Burundi to the lowest governance rankings, reduced its appeal to foreign investors, damaged relations with donors; and contributed to social discontent. More worrying still, neopatrimonialism is undermining the credibility of post-conflict institutions, relations between former Tutsi and new Hutu elites and cohesion within the ruling party, whose leaders are regularly involved in corruption scandals. In order to improve public governance, the Burundian authorities should “walk the talk” and take bold steps to curtail corruption. Civil society should actively pursue its watchdog role and organise mass mobilisation against corruption and donors should prioritise good governance.
Topic:
Corruption, Development, Foreign Aid, Foreign Direct Investment, and Governance
Political Geography:
Africa

237. Is Chinese FDI pushing Latin America into natural resources?

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, and Foreign Direct Investment
Political Geography:
China, Brazil, Latin America, and Peru

238. The unbalanced dragon: China's uneven provincial and regional FDI performance

Author:
Karl P. Sauvant, Chen Zhao, and 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, and Foreign Direct Investment
Political Geography:
China

239. Different investment treaties, different effects

Author:
Clint Peinhardt and 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, and Foreign Direct Investment
Political Geography:
United Nations

240. National companies or foreign affiliates: Whose contribution to growth is greater?

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, and Foreign Direct Investment

241. The (lack of) women arbitrators in investment treaty arbitration

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, and Foreign Direct Investment
Political Geography:
Europe

242. The public law challenge: Killing or rethinking international investment law?

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, and Foreign Direct Investment
Political Geography:
Canada, Argentina, and Australia

243. Full speed ahead: The government broadband report Q1 2012

Publication Date:
03-2012
Content Type:
Working Paper
Abstract:
The issue of high-speed internet access remains at the forefront of the policy agenda in both developed and emerging markets. While circumstances and concerns differ from one country to the next, the motivations for public-sector involvement remain the same. Governments are keen to bridge the digital divide between urban and rural areas by bringing basic broadband services of between 1Mbps and 5Mbps to all. Yet governments also want to facilitate greater rollout of so-called next-generation networks (NGNs) that can provide broadband speeds of between 40Mbps and 100Mbps, and sometimes higher.
Topic:
Development, Economics, Emerging Markets, Science and Technology, and Foreign Direct Investment

244. Private-Sector Engagement in Food Security and Agricultural Development

Author:
Johanna Nesseth Tuttle
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
With the introduction of Feed the Future (FTF)—the U.S. government's program to refocus foreign assistance on agricultural development—the private sector has been named a priority partner. President Barack Obama made a bold statement in his 2009 inaugural address, pledging that the United States would work with countries to support and promote food security. Private companies are enthusiastic about engaging in development efforts, and FTF may provide that avenue. The food and agriculture sector has significant capabilities, and market opportunities in developing countries are large and growing. Many companies have engaged in discussions with FTF leadership, and a number of partnerships have been launched. These are important efforts, and more are under way. The fact remains, however, that funding for agricultural development is relatively small—a three-year, $3.5 billion budget, compared to a six-year, $63 billion budget for health—and the investments needed in agriculture are massive: it would take $88.7 billion to meet U.S. global agricultural development goals.
Topic:
Agriculture, Development, Emerging Markets, Foreign Aid, Food, and Foreign Direct Investment
Political Geography:
United States

245. Sustainable Development Goals – a useful outcome from Rio+20?

Author:
Alex Evans and David Steven
Publication Date:
01-2012
Content Type:
Policy Brief
Institution:
Center on International Cooperation (CIC)
Abstract:
Recent months have seen increasing interest in the idea that Rio+20 could be the launch pad for a new set of 'Sustainable Development Goals' (SDGs). But what would SDGs cover, what would a process to define and then implement them look like, and what would some of the key political challenges be? This short briefing sets out a short summary of current thinking the issue, followed by thoughts about the way forward.
Topic:
Development, Economics, Foreign Aid, and Foreign Direct Investment
Political Geography:
Latin America

246. The Arab Spring: How soon will foreign investors return?

Author:
Nathan M. Jensen, Persephone Economou, Paul Antony Barbour, and 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, and Foreign Direct Investment
Political Geography:
Middle East, Arabia, and North Africa

247. The standing of state-controlled entities under the ICSID Convention: Two key considerations

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, and Governance

248. State-controlled entities control nearly US$ 2 trillion in foreign assets

Author:
Karl P. Sauvant and 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, and Foreign Direct Investment
Political Geography:
United States

249. When Voicelessness Meets Speechlessness – Struggling for Equity in Chinese-Ghanaian Employment Relations

Author:
Karsten Giese and Alena Thiel
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
In this article Chinese-Ghanaian employment relations are analyzed using the concepts of foreignness, the psychological contract, equity, and cross-cultural communication. Based on a qualitative study conducted in Accra, Ghana, we discuss the labor market in general and introduce the conditions under which Chinese sojourners operate their family trade businesses in the city. After discussing the phenomenon of Ghanaian employment within Chinese trade companies from a theoretical perspective, we explain how Chinese employers' and Ghanaian employees' culturally based perceptions of employment relations are contradictory and prone to conflict. We then show how, under the condition of the employers' foreignness, Ghanaian employees perceive their psychological contracts as being violated and Chinese employers regard the equity of exchange relations as distorted. We discuss how Ghanaian employees cope with this situation by means of voice, silence, retreat or destruction, while Chinese employers, who lack both sufficient language skills and effective sanctions, choose to endure perceived distortions of equity and in some cases ultimately terminate employment relations when inadequate cross-cultural communication results in a failure to mediate conflicts.
Topic:
Industrial Policy, International Trade and Finance, Labor Issues, and Foreign Direct Investment
Political Geography:
Africa, China, and Ghana

250. FDI, catch-up growth stages and stage-focused strategies

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, and Foreign Direct Investment