CIAO DATE: 10/2009
September 2009
Columbia Center on Sustainable Investment
Over the past two decades or so, countries have liberalized their FDI regulatory frameworks and have put in place an international investment law regime that provides various protections for international investors. In the past few years, however, there are signs that countries are reevaluating their approach toward such investment. As a result, FDI protectionism is on the rise, with screening of inward M&As becoming more frequent. Typically, this is being done under the guise of "national interest" or similar concepts, often This paper—a product of the International Trade Department, Poverty Reduction and Economic Management Network and the DFID supported Global Trade and Financial Architecture project—is part of an effort to monitor trade-related policy responses to the crisis. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at ksauva@law.columbia.edu. linked to strategic sectors and national champions. While the international investment law regime faces a challenge to find the right balance between the rights and responsibilities of governments and investors, care needs to be taken that the rise of FDI protectionism does not endanger a rules-based approach to FDI. An independent FDI Protectionism Observatory to monitor new protectionist measures and name and shame countries that take them is therefore needed.
Resource link: FDI Protectionism Is on the Rise [PDF] - 622K