Regulating Multinationals:Foreign Investment, Development, and the Balance of Corporate and Home Country Rights and Responsibilities in a Globalizing World

Abstract

This chapter examines the nature and function of international investment agreements (IIAs) within the process of economic globalization and development. The examination is carried out from the perspective of the balance of rights and obligations of the principal parties interested in the operation of IIAs. These parties are the host country which admits the investor, the home country of the investor, and the investor itself. Each party has a particular reason for having an IIA in place, and each party's rationale reflects their respective economic and political interests. The chapter then describes the current form and content of investment provisions in international agreements. It explains why in the first generation of such agreements the balance of obligations falls mostly on the host country, while the balance of rights falls on the investor, with the home country having no obligations under the IIA save where it acts as a host country to investors from other signatory states. The third section of the chapter asks whether this division of rights and responsibilities can be sustained in a changing economic, political, and social environment such as the one that has been generated by the process of globalization. It is argued that the presently one-sided nature of IIAs cannot be maintained without the risk of a serious backlash against investor and investment protection among countries eager to assert their economic sovereignty and self-determination in the world.