Investment Liberalization Research Articles

Can Investment Liberalization Improve Enterprise Productivity

In the context of the new development pattern, a deep understanding of the factors affecting enterprise productivity and an accurate evaluation of the implementation effect of foreign access policies have important theoretical and practical significance for further promoting the improvement of enterprise quality and efficiency, and promoting the high-quality development of the Chinese economy. This article is based on the former research and uses the negative management list of foreign investment as the research basis to study the impact of investment liberalization on enterprise productivity and propose relevant policy recommendations.

Challenges and Responses to International Investment Rule-making

The world economic pattern is experiencing a great change that has not been seen in a hundred years, and the construction and adjustment of the international investment rules system is an important manifestation of the multipolarity of the world economy, which plays an important role in promoting the healthy development of the investment pattern. However, in the process of development, the international investment treaty rule system is facing many difficulties, such as "fragmentation", too many bilateral investment treaties, intensified conflicts between developed and developing countries, and unsound dispute settlement institutions, etc. In this regard, the establishment of a "de-fragmented" international investment treaty rule system is a major challenge. For this reason, it is important to establish a "de-fragmentation" mechanism, reform the investment dispute settlement bodies and enhance the influence of developing countries, with a view to promoting the liberalisation and facilitation of international investment and improving the international investment treaty rules system.

Import Dynamics in the Central and Eastern European Countries

The dynamics of imports in Central and Eastern European countries are closely related to foreign direct investment and government policies. By reducing tariff and non-tariff barriers to imports and promoting trade and investment liberalization, governments can attract foreign capital and diversify the range of products and services available in the host economy. This interconnection between imports and foreign direct investment can have a positive impact on economic development and global integration, depending on national strategies and policies. The article examines the dynamics of imports in Central and Eastern European countries in relation to foreign direct investment and government policies and aims to identify trends, import differences, and adjustments made by each country to improve their economic development. The research highlights the ongoing evolution of international trade in the region and advocates for a strategic approach to trade and economic policy for economic expansion and resilience to external shocks.

The Impact of Foreign Direct Investment on Economic Growth in Jordan: A Study of the Period 1978-2021

Objective: This paper aims to measure the impact of foreign direct investment on economic growth in Jordan during the period (1978-2021), based on a set of standard tests that will help clarify the relation between the variables of the study. Theoretical Framework: This paper proposes to examine the benefits of an open market economy based on trade and investment liberalization. The focus will be on factors that attract foreign direct investment, such as improving GDP, infrastructure, and political stability. These factors significantly impact employment rates, technology transfer, export development, and balance of payments. Method: The study used Eviews-9 to estimate a suitable linear model. A unit root test using ADF methodology indicated stationary variables at I(0) level. The Johansen methodology was used to perform a joint integration test, which showed that the two variables were complementary according to the Trace Test and Maximum Eigenvalue. Results and Discussion: After estimating the results of the equation using the Ordinary Least Squares regression (OLS), the results indicate that if the percentage of foreign direct investment increases by 1%, the GDP increases by 0.05%. All transactions are statistically significant at a level less than (0.01). R2 also indicates that FDI explains 18% of changes in GDP. Research Implications: Foreign direct investment is crucial for developing countries like Jordan, as it helps increase cash flows. Jordan strives to create favorable laws to attract more investments. Originality/Value: The study compared Jordan's case with previous studies and found similarities and differences. Jordan's political, security, and geographical situation, along with continuous development of investment-related legislation, made it more fortunate than others.

Article: The 2019 BLEU Model BIT: BLEU’s Vision of the Future of Investment Protection

This article compares the 2019 BLEU model bilateral investment treaty with the older 2002 version. After an overview of the BLEU’s role as a major actor in international investment law, the authors argue that the changes introduced by the 2019 Model BIT reflect the EU’s policy towards foreign investment protection. The drafters of the 2019 Model BIT were inspired by the EU-Canada Comprehensive Economic and trade Agreement and the European Commission’s proposal to establish a Multilateral Investment Court. The 2019 Model BIT marks a shift from liberalization of foreign direct investment (FDI) to the protection of the sovereign powers, in particular the State’s right to regulate, and the curtailing of investment protection presented as a response to the investment protection system’s misuse and abuse by investors. By placing certain limitations to substantive standards of protection, placing strong emphasis of sustainable development objectives and advocating a reform of the investor-State dispute settlement (ISDS), the 2019 BLEU Model BIT puts forward a vision for the future of investment protection that departs from the Washington Consensus of economic liberalization but also enables the investment protection system to survive in the face of the so-called backlash against ISDS and the criticism of civil society.

Labour Rights in the Wake of the WTO

One of the most contentious issues surrounding globalization includes trade and labours rights. In the real world, trade and labour circumstances have an impact on one another. Trading nations should be subject to significant labour standards. It was believed that enforcing labour standards via trade agreements helps to improve the working conditions and income in poor countries, and minimize wage inequalities between rich and poor countries. The World Trade Organization’s (WTOs) establishment has resulted in the liberalization of trade and investment. Transnational corporations (TNCs) have become more economically powerful than many countries around the world in today’s era of globalization and free trade. These powerful TNCs are violating labour rights and are not accountable for that because of the lack of a legal framework. This calls for a look at issues that arise at the interface of international trade and labour standards, including a brief historical review of labour rights and the, as well as the impact of TNCs on labours and accountability. World Trade Organization, Labour Rights, International Labour Organization, Globalization, Trade, Transnational Corporations, International Labour Rights, Free Trade, Labour standards

Liberalization of Higher Education Services: Exploring the Prospects and Challenges Under the ‘Australia-Bangladesh Trade and Investment Framework Agreement’

This article examines the potential opportunities and challenges for the liberalization of higher education services between Australia and Bangladesh under their recently concluded ‘Trade and Investment Framework Agreement (TIFA)’. Given their complementary economic imperatives, there is strong potential for growth in bilateral trade and investment in higher education services. Australia with its advanced higher education system would benefit from investments in higher education sector in Bangladesh. Bangladesh with its impressive growth performance would require educated, skilled, and knowledge-based workforce to sustain its ongoing economic development. It would benefit from the stock of human resources endowed with the high-quality education and training provided and supplied by the advanced higher education institutions and investors of Australia. This article prescribes ways of promoting and deepening their bilateral economic integration through investing in higher education services, identifies niche areas for additional opportunities, and highlights barriers to be overcome to derive and maximize mutual benefits. Education service is one of the least committed sectors under GATS. Economic growth-oriented bilateral liberalization of trade and investment in higher education services between Australia and Bangladesh is likely to have wider domino effect on others to follow, thus serving as a stepping-stone towards the progressive liberalization of multilateral trade in services under the World Trade Organization (WTO). Higher Education, Trade in Services, Education Services, Liberalization, Australia, Bangladesh

The Evolution of Substantive Protection in EU International Investment Agreements: Taking Stock of the EU’s Early Treaty-Making Practice

This article analyses the evolution of substantive investment protection in EU IIAs, i.e., CETA, EUSIPA, EVIPA, the TCA and the proposed CAI. It argues that the overall ‘balancing’ of ‘new-generation’ IIAs has changed. First, these agreements have reduced the scope of investment protection and prioritised market access, investment liberalisation, and investment facilitation by simplifying the transfer of funds and personnel and increasing transparency. Secondly, EU IIAs embrace a limited, yet predictable, approach to investment protection. Non-discrimination standards, NT and MFN, are comprehensively defined, compared to traditional European BITs. Absolute standards of protection, FET and expropriation, entail a balancing exercise in CETA but are missing in the TCA and the Proposed CAI. Investment liberalisation and pre-establishment market access have therefore outstripped post-establishment protection in importance. This approach suggests a re-evaluation by EU policymakers of the relative importance of openness over investor protection. Accordingly, investors should expect limited protection from these agreements. Investment standards, FET, MFN, European Union, CETA, CAI, TCA, Brexit

The Influence of Governance Quality Factors on Stock Market Performance in ASEAN

Whilst regional participation across ASEAN induces the liberalization of trade and investment, as well as other forms of economic cooperation, the quality of governance plays a crucial role as it is a key component of sustainability. This study aimed to examine how governance quality factors influenced stock market performance. This study applied the Panel Least Square (PLS) and Panel Cointegration Full-Modified Ordinary Least Squares (FMOLS) estimations to gauge how quality governance factors impact an integrated ASEAN stock market in the long run. This study utilized data from the ASEAN Exchanges covering the period 2002 to 2020. The findings demonstrated the significant positive influence of voice and accountability, as well as political stability and the lack of violence; meanwhile, rule of law negatively affects the stock market performance. The study also identified a long-term relationship between governance quality and stock market performance. This implies that higher-quality governance improves the stock market performance in an integrated market. Keywords: governance quality, stock market performance, ASEAN exchanges

Determinants of FDI inflows: Aggregate versus country-specific evidence from ASEAN-6

This paper seeks to explore the determinants of foreign direct investment (FDI) inflows into six countries of the Association of Southeast Asian Nations (ASEAN), namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, from 1995 to 2019. Estimations for the aggregate model are conducted with the Driscoll–Kraay standard errors panel regression approach, while the country-specific analyses are based on the fully modified ordinary least squares (FMOLS) approach. At the aggregate level, gross domestic product (GDP) growth, trade openness, unemployment, working-age population and interest rate spread are the main drivers of FDI inflows into the ASEAN-6, while per capita GDP, real interest rate and the global financial crisis have no significant impact. The empirical analysis for the specific-country cases yields mixed results, implying that international corporations may have various criteria to evaluate before making investment decisions depending on the development stage of the host country. Our research findings offer several implications for policymakers to attract quality FDI: (i) fostering trade and investment liberalization through taking down trade barriers and tariffs across nations; (ii) enhancing the quality and capacity of the labor force through management policy renovations; (iii) stabilizing interest rates through monetary policy management to ensure macroeconomic stability.

The impact of foreign direct investment on agricultural exports: The evidence from developing countries

In this paper, we examine how foreign direct investment inflows in agriculture affect the agricultural exports of developing countries. The main objective of our analysis is to identify and quantify the export effects of foreign direct investment in the sector, as well as the effects of other relevant export determinants, and to explore the possible long-run relationship between the variables. Using panel data on 80 developing countries observed in the period 2005-2017, we employ the system-generalised method of moments and the method of quasi-maximum likelihood to estimate a dynamic agricultural exports model. Additionally, we test for the cointegration between exports and foreign direct investment using the Pedroni and Kao approaches. We find that foreign direct investment inflows have a positive impact on agricultural exports in the analysed countries in both the short run and the long run. Thereby, we identified the significance of both direct and spillover export effects. This implies that the liberalisation and promotion of foreign investment in agriculture could alleviate the problems of capital scarcity and constraints in developing countries and increase their agricultural export competitiveness.

Taiwan Semiconductor Manufacturing Company: A Key Chip in the Global Political Economy

Taiwan Semiconductor Manufacturing Company (TSMC) has become the world’s most important semiconductor chip manufacturer, thanks to greater trade and investment liberalisation, Taiwan’s pool of high-quality engineers and TSMC’s unique and dedicated model of chipmaking. As TSMC’s dominance is unlikely to be replaced anytime soon, the world’s heavy reliance on “Made in Taiwan” chips will continue to place the democratic island at the centre of the global political economy in the foreseeable future.

Uloga bilateralnih investicionih sporazuma u podsticanju internacionalizacije preduzeća u Srbiji

Bilateral investment treaties are traditionally considered to be an instrument for attracting foreign direct investment in Serbia. However, their provisions may also support the internationalization of its enterprises. In this paper, we explore how effective bilateral investment treaties are in promoting the most challenging aspect of the internationalization of enterprises in Serbia -foreign direct investment outflows. Additionally, we investigate the role of other main motivations for the investment outflows. We conduct our analysis by estimating a gravity model using the panel data on Serbia and its 147 partner economies, observed in the period between 2011 and 2019. The gravity model was estimated using the Poisson pseudo-maximum likelihood estimator. We find that bilateral investment treaties have a statistically significant positive effect on bilateral foreign direct investment outflows. Furthermore, the outflows are particularly affected by the treaties containing higher anti-discrimination standards and providing a more liberal investment regime. Unilateral liberalization of the host countries' investment regime is also found to be positively associated with the investment outflows, whereas both the geographic and psychic distances have negative effects. Market-seeking motives of the internationalizing enterprises in Serbia are revealed to be the dominant driver of the investment. The results provide useful implications for the policymakers aiming to support the internationalizing efforts of the enterprises and the consequent improvement of the international competitiveness of Serbian economy.

The Effect of Exports and Two-Way Foreign Direct Investment between China and Pan-East Asian Countries

Rising protectionism and globalization have led to new interest in new regionalism. The facilitation and liberalization of two-way direct investment between China and Pan-East Asian countries result in increasing exports between these countries. By studying the relationship between China’s investment and export trade in Northeast Asian and Southeast Asian countries, this paper explores the influence mechanism of China’s two-way foreign direct investment and export trade with Pan-East Asian countries. The study discovers that with the improvement of the bilateral economic development level, China’s Outward Foreign Direct Investment (OFDI) to Northeast Asia and Southeast Asian countries will significantly increase the scale of China’s export trade. Yet, the total value of the export creation effect decreases over time. China’s utilization of Inward Foreign Direct Investment (IFDI) has a significant inhibitory effect on export trade. The two-way interaction effect of China’s OFDI and IFDI is weak. As the level of IFDI in China increases, the effect of OFDI on exports increases—though this effect differs across regions and countries.

Synergies and Approaches to Climate Change in International Investment Agreements

Abstract International investment agreements have always been in the center of critique with regards to the incompatibility of international economic law with climate change policies. The overly simplistic bilateral investment treaties have been gradually being replaced by more textually complex agreements that include specific provisions or chapters on sustainable development and climate change. The European Union has been very active in this process. The present article seeks to provide an overview of the recent treaty practice of the European Union and its present negotiations of future treaties. There it will examine particular approaches in treaty-making practice, i.e. investment protection as enshrined in the fair and equitable treatment standard, and investment liberalization as provided, among others, by the recent EU–UK Trade and Cooperation Agreement. Lastly, it examines how investment liberalization and regulation approaches to investment agreements synergize with climate change policies.

A Legal Comparative Approach towards the Screening of Outbound FDI

After decades of investment liberalisation, the attitude towards foreign direct investment (FDI) has changed. FDI is nowadays perceived more and more as a threat to the national interests owing to the risks associated with it. In order to address and mitigate these risks, various countries have adjusted their existing FDI screening mechanisms and created new ones. While so far legislators and regulators have been focused mainly on inbound FDI, the US National Critical Capabilities and Defense Act (NCCDA), a bipartisan proposal, is meant to address the risks associated with outbound FDI. Taking into account the current geopolitical environment and the risks associated with it, it is necessary that the EU and its Member States also consider screening outbound FDI. In doing so, valuable lessons can be drawn from the US NCCDA proposal.

Is investment facilitation a substitute or supplement? A comparative analysis of China and Brazil practices

Investment facilitation, which tackles ground-level obstacles to FDI and has no substantial challenges to regulatory space, is emerging as a new trend of global governance. Meanwhile, the content and method to implement investment facilitation are still evolving. Both as top FDI destinations and largest emerging countries in South America and Asia respectively, Brazil and China have adopted somewhat different approaches towards investment facilitation. Due to traditional resistance to BITs network, Brazilian developed a new model of investment treaty, i.e., Cooperation and Investment Facilitation Agreement (CIFA). CFIAs primarily focus on investment facilitation through institutional cooperation, but the scope and degree of investment protection are quite insufficient. China’s approaches towards investment regime are inclusive, i.e., it is a practitioner of investment facilitation as well as a proponent of IIAs with a balanced ISDS mechanism. On the one hand, while investment protection and liberalization system are essential part of good business environment, IIAs don’t necessarily lead to friendly regulatory environment to attract FDI inflows. In this regard, the policy of investment facilitation is complementary to existing international investment regime. It is suggest that China draws some experiences from Brazil in terms of institutional governance and establishing a similar and effective dispute prevention system. On the other hand, access to justice is still important to foreign investors, the policy of investment facilitation can’t act as a total substitute of traditional BITs worldwide. Considering the Brazilian investors’ increasing outbound investment and the growing needs of investment protection, it is suggested that China’s open and liberal policies are worth learning for Brazil.

A Strategic Base in the Global Supply Chain: Türkiye

Türkiye is becoming a new base in the global supply chain due to its geopolitical position and the cost advantages it provides. Due to the COVID-19 outbreak, logistics problems, especially production and transportation costs, have further strengthened Türkiye’s position in this context. Türkiye’s strategic location, strong logistics infrastructure, costeffective and qualified workforce, along with a liberal investment climate, offer a suitable environment for international companies. Türkiye ranks well in the World Bank’s Logistics Performance Index, which evaluates countries’ logistics performance in customs, transportation, and infrastructure. Türkiye has served as a bridge between the east and west since historical times. During the Seljuk period, caravanserais and other infrastructure and service areas were established in Anatolia to support commercial activities. The Silk Road, which had an important place until a certain period of the Ottoman Empire, lost its importance due to other developments. The “One Belt One Road Project” initiated by China, still in progress and planned to be completed in 2049, will make Türkiye even more important in terms of the global supply chain in the next 10 years. İpekyolu follows the northern and southern routes in Anatolia. With China’s “One Belt One Road Project”, the Silk Road will regain its former importance as the “Modern Silk Road”. Chinese President Xi Jinping fi rst mentioned the Land and Sea Silk Road project in one of his speeches in 2013. It has been decided to name these two projects as the “Belt and Road Initiative-BRI” or the “One Belt One Road-OBOR” project. The word belt constitutes the land route of the project, which includes highways, railways, oil and natural gas pipelines, and infrastructure investments. The word road includes the sea routes covered by the project. The routes of these corridors are provided by multidimensional corridors in the direction of Asia-Europe instead of a single route. Within the scope of this project, many infrastructure investments are made in Türkiye as well. In this study, the cost advantages that Türkiye will provide to the global supply chain will be evaluated due to both its cost and geographical location and the infrastructure investments made.

The Regime of International Investment in the Light of New EU Economic Agreements

Abstract By the term "regime" of international investment, we mean the fundamental principles and rules that constitute the regulatory framework for the investment of nationals or companies of one State in the territory of another. This regime comprises two components, the first of which relates to the establishment of foreign investment / investors in the host State and the second, and most important, covers their subsequent treatment by its public authorities. Such principles and rules are laid down in the new EU economic agreements, some of which constitute comprehensive Free Trade Agreements containing a chapter on foreign investment establishment liberalization (EU-Japan, EU-South Korea, EU-Australia, EU-New Zealand), others which also have comprehensive scope, contain a chapter on both investment liberalization and investment protection (EU-Canada CETA, EU-Mexico) while others are stand-alone investment agreements as they exclusively rule the protection of the investments of one party's nationals or companies in the territory of the other (EU-Singapore IPA, EU-Vietnam IPA, EU-Japan IPA). These EU agreements contain reformed investment protection rules that are not present in the existing Bilateral Investment Treaties (BITs). A key common feature of the above agreements, especially in the field of protection/treatment of foreign investment/investors, is the establishment of rules seeking to clarify some critical concepts in order to reduce the margins of discretion of both parties and their investors in the interpretation and application of rules adopted. In this context, the texts clarify, first of all, the notion of investment and investor to make clear who are entitled to invoke the provisions of the agreements to claim protection against the practices of the authorities of the host Party. It is clear that the so-called ‘shell’ or ’mailbox’ companies are not protected. The agreements also define more clearly and precisely on the one hand the concept of fundamental standards of treatment (non-discrimination, fair and equitable treatment, physical security, protection against expropriation, possibility to transfer and repatriate funds relating to an investment) and on the other hand the cases in which the authorities of the Contracting Parties are in breach of these standards. The aim is to avoid unfounded complaints against measures which do not, however, constitute a breach by the authorities of the obligations arising from the provisions of the agreements. The pursuit of creating a secure legal environment for foreign investors and their investments ultimately involves the creation of a permanent, objective, independent and impartial dispute resolution system. JEL classification numbers: K33, F02, F21. Keywords: European Union, International Agreements, Investment liberalization, Investment Protection.

Market access for investment and services under the EU–China comprehensive agreement on investment: an appraisal

ABSTRACT The EU–China Comprehensive Agreement on Investment (CAI or the Agreement) is a politically win-win deal for the EU, driven by the urgency of addressing asymmetries of its investment relationship with China, and China, which wants to safeguard the EU’s openness to its investors. Economically, however, the impact of its market and liberalization offers remains to be seen admit the increased geopolitical tension between the EU and China. Still, Section II of the principally agreed text of the CAI supports the case for rule-based investment liberalization, advocating a level playing field for investors, mainly EU investors in China. At the same time, given its predominant emphasis on market access for investment, the Agreement stands out amongst investment treaties that principally concentrate on investment protection. Similarly, it is unique among Chinese investment treaties that do not (firmly) provide for market access for investment, marking a further step in the EU’s emergent investment treaty-making practice that focuses beyond investment protection.