Sustainable Investment and its Relationship to Political Risk Reduction

Abstract

This article explains the relationship between an investor proposing an investment which is considered “sustainable” to a potential host state and the reduction in political risk if the investment is accepted because of its sustainability. Also, if the investment is sustainable, within the concepts developed by such organizations as OECD, UNCTAD, Global Compact and International Finance Corporation of World Bank, there will be greater likelihood that such investment will be accepted by the proposed host state. The article then discusses assistance that home states often provide for outward foreign direct investment by their nationals, and why home states see this activity as beneficial to the home state. Host states that want to encourage inward foreign direct investment also have Investment Promotion Agencies whose role is to work with potential foreign investors to bring in desirable FDI. Investment facilitation as a global matter and the efforts of WTO to encourage FDI. The article also refers to the OECD Quality FDI Toolkit and its ongoing development.