The report’s findings in its third chapter on the recent global and regional foreign direct investment (FDI) policy trends can be summarized as follows: (1) A dichotomy has emerged in FDI policy trends, with further liberalization and facilitation of inward FDI (IFDI) in response to more intense global competition for IFDI, accompanied by simultaneous new or tighter FDI regulations to pursue broader policy objectives, by rebalancing the rights and obligations of foreign investors and the state.
These regulations have included new entry and operational restrictions, stricter application of current rules, and some expropriations and nationalizations. (This dichotomy is in contrast to the liberalization trend in the 1990s and early 2000s and the regulation trend that had preceded it.) Although there has been much concern about the impact of national economic stimulus packages and state aid on FDI, the world has avoided thus far -- thanks to the G-20’s efforts, with the help of the UNCTAD’s and the Organization for Economic Cooperation and Development’s (OECD) monitoring -- protectionist and other beggar-thy-neighbor policies that could have restricted FDI flows. (2) Since unlike international trade, which is governed by the World Trade Organization (WTO) at the multilateral level, FDI is not governed multilaterally by an international institution, international investment agreements (IIAs) have expanded rapidly, with over 5,900 treaties currently (on average four IIAs were signed per week in 2009). The IIA system, including bilateral investment and double taxation treaties, has been changing rapidly, as countries align their IIAs with their other policy objectives in the economic, social, environmental, and national security spheres. Proliferating plurilateral trade agreements and economic integration efforts have also affected the primarily bilateral IIA regimes. For example, the recent Treaty of Lisbon shifts responsibilities in the field of FDI policy, amending the EU common commercial policy, from member States to the EU. (3) Paralleling the expanding IIAs, the cases of investor-state dispute settlement have continued to rise, most frequently through the International Centre for Settlement of Investment Disputes. International FDI arbitration issues are affecting the evolution of the IIA regime in a more refined and sophisticated direction. WIR 2010 concludes that the IIA regime, “characterized by a multitude of overlapping and sometimes contradictory rules, is moving towards a more convergent and coherent body of international law … in a way that is more efficient and conducive to growth and development.” (4) National FDI policies are expected to be directly affected by evolving global initiatives such as financial regulatory reforms and climate change mitigation and adaptation efforts.
Let’s hope the global FDI recovery continues unabatedly this year and beyond, setting the stage for a strong resurgence of Turkey’s IFDI flows, to the great benefit of the Turkish economy.
