International investment agreements

International Investment Perspectives 2007: Freedom of investment in a changing world




The global environment for foreign direct investment (FDI) improved in 2006 with investment inflows in OECD countries reaching US$ 910 billion – their highest level since the record year 2000. Cross-border mergers and acquisitions – a central component of FDI – continued to grow in 2007 and could be headed for their highest-ever levels. These developments have given rise to concerns in some quarters. The public opinion in many OECD countries has for some time focused on the risk of jobs being lost through delocalisation of parts of domestic companies’ value chains. And policy makers have become concerned about foreign acquisition of "strategic" industries, including enterprises with access to sensitive technology and natural resources. Against this stands the fact that the internationalisation of business through investment and trade has been one of the main value-enhancing influences in the global economy over the last decade. This is shown by the rapid growth and fuller integration in international economic structures of a number of emerging economies, who have emerged as important sources of outward direct investment.

This volume of International Investment Perspectives contains two main analytic sections. The first addresses an apparent growth in discriminatory practices toward cross-border investment in recent years motivated by concerns about national security and related essential concerns. Four articles summarise work done so far by OECD in the run-up to the G8 Summit in June 2007, where the issue figured prominently on the agenda. The articles consider the costs of excessive restrictiveness, examine the degree to which authorities may self-judge what constitutes "security", and propose a methodology for scoreboarding the restrictiveness of investment regulation. The second main section focuses on the new opportunities arising from FDI and the changing nature of the international economy in which investment takes place. One article explores the linkages between FDI and intellectual assets, in particular the degree to which international investment may boost, or diminish, the knowledge base in host economies. Another article examines the importance of small and medium-sized enterprises for FDI, including through their linkages with larger companies.

This issue of International Investment Perspectives includes the following articles:

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