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THINKTANK


RESEARCH


Fostering linkages is part and


parcel of the mandate of many IPAs, and MNEs would welcome the opportunity – especially at a time when they explore ways to make their global value chains more resil- ient. If the creation of supplier-devel- opment programmes should be included in an IFF4D, furthermore, IPAs would be able to count on inter- national technical assistance when launching or strengthening such programmes. IPAs are also often involved, in


one way or another, in realising large-scale investment projects that are implemented on the basis of investor-state contracts. They have an interest in securing such projects, and they have an interest in getting them on the basis of terms that are as favourable for their countries as possible. It is therefore in the interest of IPAs – both those responsible for attracting FDI and the increasing number of IPAs that support outward FDI – to be able to benefit from international support for contract negotiations and, hence, to encourage countries in a position to do so to support institu- tions that provide such support. Finally, negotiators of the WTO


IFF4D, as well of other international investment agreements that contain concrete investment facilitation measures, need the input of IPAs for their negotiations. Most negotiators of such agreements are trade negoti- ators and lawyers, and not many of them have the ground-level experi- ence of the practitioners involved in facilitating FDI flows. As part of their policy-advocacy function, IPAs are in an excellent position to provide their insights on this matter. In doing so, they can also ensure that the treaties concluded on this subject cover the most


important investment-facilitation measures, can make a difference when they are being implemented and, ultimately, help IPAs pursue their mandates.


Conclusions For governments, FDI is merely a tool to advance their national economic growth and development. They need to see clearly, therefore, that allowing FDI is beneficial for them. Influencing the distribution of benefits in favour of countries is not an easy task under any circum- stances, given howcompetitive the world FDI market is. But if countries are to benefit fromFDI to the great- est extent possible, and interna- tional investors are to prosper, home countries, host countries and MNEs have to make every effort to pursue policies thatmake it interesting for governments to admit FDI into their economies and for investors to invest in them. The three actionable policy areas


outlined here are only examples of howthe distribution of benefits among the three principal parties to the investment process can be improved in favour of host coun- tries. And this can be done in a manner that does not deter foreign investors or, for that matter, cause the opposition of home countries – in fact, it is in their own enlightened self-interest.■


Karl P. Sauvant (karlsauvant@gmail.com) is a resident senior fellow at the Columbia Center on Sustainable Investment, a joint center of Columbia Law School and the Earth Institute at Columbia University. This article draws on his “Improving the distribution of FDI benefits: The need for policy-oriented research, advice and advo- cacy”, Journal of International Business Policy, 2021.


WELL-NEGOTIATEDCONTRACTS ARE LIKELY TO BEMORESTABLEANDIN THE INTEREST OF ALL PARTIES


August/September 2021 www.fDiIntelligence.com 93


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