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The Role of International Investment Agreements in Attracting Foreign Direct Investment to Developing Countries

image of The Role of International Investment Agreements in Attracting Foreign Direct Investment to Developing Countries

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Preferential trade and investment agreements

This chapter is concerned with the impact of preferential trade and investment agreements (PTIAs), and notably of economic integration agreements (EIAs) on FDI flows into developing countries. EIAs are treaties aimed at facilitating international trade and cross-border movement of factors of production among contracting parties. They may or may not discriminate against non-member States. While originally concerned mainly with trade in goods and rarely with factors of production, EIAs today also increasingly address investment issues, thus forming a special category of IIAs. If they include investment provisions, they are referred to by UNCTAD as economic integration investment agreements or PTIAs (UNCTAD, 2006b: 1). By end 2007, there were 254 such agreements. Investment provisions in PTIAs may be narrow or extensive and may address issues related to the promotion, protection, liberalization and other rules relevant for investment, such as competition policy. Thus, in many aspects, investment provisions in PTIAs are similar to provisions in BITs. In fact, BITs have influenced the investment provisions of many PTIAs (UNCTAD, 2006b: 2).

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