This book presents original research that examines the growth of international investment agreements as a means to attract foreign direct investment (FDI) and considers how this affects the ability ...of capital-importing countries to pursue their development goals. The hope of countries signing such treaties is that foreign capital will accelerate transfers of technologies, create employment, and benefit the local economy through various types of linkages. But do international investment agreements in fact succeed in attracting foreign direct investment? And if so, are the sovereignty costs involved worth paying? In particular, are these costs such that they risk undermining the very purpose of attracting investors, which is to promote human development in the host country? This book uses both economic and legal analysis to answer these questions that have become central to discussions on the impact of economic globalization on human rights and human development. It explains the dangers of developing countries being tempted to 'signal' their willingness to attract investors by providing far-reaching protections to investors' rights that would annul, or at least seriously diminish, the benefits they have a right to expect from the arrival of FDI. It examines a variety of tools that could be used, by capital-exporting countries and by capital-importing countries alike, to ensure that FDI works for development, and that international investment agreements contribute to that end.
This uniquely interdisciplinary study, located at the intersection of development economics, international investment law, and international human rights is written in an accessible language, and should attract the attention of anyone who cares about the role of private investment in supporting the efforts of poor countries to climb up the development ladder.
Debt maturity influences debt overhang, the reduced incentive for highly levered borrowers to make real investments because some value accrues to debt. Reducing maturity can increase or decrease ...overhang even when shorter term debt's value depends less on firm value. Future overhang is more volatile for shorter term debt, making future investment incentives volatile and influencing immediate investment incentives. With immediate investment, shorter term debt typically imposes lower overhang; longer term debt can impose less if asset volatility is higher in bad times. For future investments, reduced correlation between assets-in-place and investment opportunities increases the shorter term debt overhang.
How can countries in the underdeveloped world position themselves to take best advantage of the positive economic benefits of globalization? One avenue to success is the harnessing of foreign direct ...investment (FDI) in the “nontraditional” forms of the high-technology and service sectors, where an educated workforce is essential and the spillover effects to other sectors are potentially very beneficial. In this book, Roy Nelson compares efforts in three Latin American countries—Brazil, Chile, and Costa Rica—to attract nontraditional FDI and analyzes the reasons for their relative success or failure. As a further comparison, he uses the successes of FDI promotion in Ireland and Singapore to help refine the analysis. His study shows that two factors, in particular, are critical. First is the government’s autonomy from special interest groups, both domestic and foreign, arising from the level of political security enjoyed by government leaders. The second factor is the government’s ability to learn about prospective investors and the inducements that are most important to them—what he calls “transnational learning capacity.” Nelson draws lessons from his analysis for how governments might develop more effective strategies for attracting nontraditional FDI.
This Article applies the theory of comparative institutional analysis to evaluate the trade-offs associated with alternative mechanisms for resolving investment disputes. We assess the trade-offs in ...light of the principle of accountability under the rule of law, which underpins the goals of fairness, efficiency, and peace that are attributed to investment law. The Article makes two recommendations: first, reforms should address complementarity between domestic and international institutions; second, institutional choices should respond to the different contexts that states face.
Investing with Confidence Verheyen, Gero; Mohan, Perera | Srilal; W., Lu | Kevin ...
2009, 10-01-2009, 20090101
eBook, Book
Open access
Coinciding with the Multilateral Investment Guarantee Agency's (MIGA) twentieth anniversary, "Investing with Confidence: Understanding Political Risk Management in the 21st Century" examines key ...political risk issues including claims and arbitration, perspectives on pricing from the private, public and multilateral providers, as well as exploring new frontiers in sovereign wealth funds and Islamic finance. These topics are particularly relevant for today's uncertain markets, and provide important analysis and thinking from key practioners and clients. Political risk insurance is critical to maintaining flows of foreign direct investment into developing markets; this volume offers valuable insights for practitioners and investors alike.
As domestic sources of outside finance are limited in many countries around the world, it is important to understand factors that influence whether foreign investors provide capital to a country's ...firms. We study 4,409 firms from twenty-nine countries to assess whether and why concerns about corporate governance result in fewer foreign holdings. We find that foreigners invest less in firms that reside in countries with poor outsider protection and disclosure and have ownership structures that are conducive to governance problems. This effect is particularly pronounced when earnings are opaque, indicating that information asymmetry and monitoring costs faced by foreign investors likely drive the results.
In the twenty-first century, land deals in the Global South have become increasingly prevalent and controversial. Transnational access to arable land in impoverished "land-rich" countries in Latin ...America, Sub-Saharan Africa, and Southeast Asia highlights the link between the shifting geopolitics of economic development and problems of food security, climate change, and regional and international trade. Drawing on ethnographic and archival research, Upland Geopolitics uses the case of Chinese agribusiness investment in northern Laos to study the unbalanced geography of the new global land rush. Connecting the current rubber plantation boom to a longer trajectory of foreign intervention in the region, Upland Geopolitics reveals how legacies of Cold War conflict continue to pave the way for transnational enclosure in a socially uneven landscape. Upland Geopolitics is freely available in an open access edition thanks to TOME (Toward an Open Monograph Ecosystem) and the generous support of Indiana University. DOI: 10.6069/9780295750507
This book tackles crucial issues regarding the emerging global market for corporate governance. The authors describe and explain the transformation of European corporate governance in the light of ...the imperatives driving global financial markets, using an innovative analytical framework. They chart the response of corporate managers to the interest of global portfolio managers in transparent and accountable modes of corporate governance. In doing so, the authors provide an innovative perspective on a rapidly changing environment, and a challenge to those who ignore the gathering momentum of global financial markets.
Countercyclical Risk Aversion Can Explain Major Puzzles Such as the High Volatility of Asset Prices. Evidence for its Existence is However, Scarce Because of the Host of Factors that Simultaneously ...Change During Financial Cycles. We Circumvent these Problems by Priming Financial Professionals with Either a Boom or a Bust Scenario. Subjects Primed with a Financial Bust were Substantially More Fearful and Risk Averse than those Primed with a Boom, Suggesting that fear may play an Important Role in Countercyclical Risk Aversion. The Mechanism Described here is Relevant for Theory and may Explain Self-reinforcing Processes That Amplify Market Dynamics.
This study investigates the value of the strategic flexibility provided by firms' international investments during an economic crisis, defined here as an unanticipated significant downturn in the ...economy. To avoid below-par performance, firms need to adapt quickly to this significant change in their environment, making real options very valuable to them. Although firms' international investments can potentially provide such flexibility, this issue has not been empirically examined in a context of such dramatic negative change. We consider two types of international investments by firms in this regard, foreign direct investments and export-related international investments, developing two measures that directly assess the flexibility derived from each that are new to the literature. Based on these measures, we find evidence that both types of international investments provided valuable flexibility for Korean firms during the economic crisis conditions. This study contributes to the literature by showing that firms with real options investments in place have a greater ability to flexibly adapt their overall operations in line with unforeseen negative environmental change, in contrast to firms without such investments.
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