Repatriation Of Profits Research Articles

Trade in Value Added, Jobs and Investment

The increasing international fragmentation of production that has occurred in recent decades driven by technological progress, cost, access to resources and markets, trade policy reforms, and indeed emerging economies, has challenged our conventional wisdom on how we look at and interpret trade. Traditional measures of trade, record gross flows of goods and services each and every time they cross borders leading to what many describe as a ‘multiple’ counting of trade, which may lead to misguided policy measures. To respond to this challenge a number of initiatives have been launched in recent years that attempt to measure, or perhaps more accurately ‘estimate’, what has become known as ‘trade in value-added’. These have all helped to shed light on the importance of accounting for global value chains and have helped raise awareness of a growing need to mainstream the production of these estimates within the international statistics system. Responding to these challenges on 15 March 2012 the OECD and WTO undertook to collaborate on the development of estimates of trade in value-added (TiVA), resulting in a first release of a preliminary database on 16 January 2013 and a subsequent update in May 2013. This paper describes some of the key results of that work, and the methodology used. It also describes the detailed assumptions behind the methodology to necessarily deal with the treatment of data, and also the initiatives launched to improve the quality of those assumptions and the underlying data. The paper also describes extensions of the work to consider ‘trade in jobs’, and, proposes a framework to develop Extended national Supply Use tables that capture flows of primary/property income, so providing a mechanism to analyse the links between investment and global value chains. While TiVA estimates have been able to shed important light on our understanding of international trade and its relation to activity and competitiveness, in particular the importance of recognising the importance of imports to exports, and, so, the hitherto hidden costs of protectionism as well as the benefits of trade liberalisation, particularly in services, they do not reveal the full picture. With significant shares of exports being driven by foreign affiliates, TiVA estimates have also revealed the importance of going beyond just value-added towards income, in order to capture flows outside of conventional international trade statistics, such as the repatriation of profits related to the use of non-produced knowledge based assets (e.g. brands) and, indeed, the repatriation of profits related to the use of produced knowledge based assets (e.g. software) that are (often incorrectly) not recorded as receipts from exports of services.

Natural Resource-Seeking FDI Inflows and Current Account Deficits in Commodity-Producing Developing Economies

Natural resource-seeking foreign direct investment (FDI) rose substantially during the last two decades as global commodity prices soared. This type of FDI typically is expected to improve the current accounts of recipient countries. Notwithstanding the commodity boom, however, current account balances of many commodity-producing developing economies were negative during 1995–2013. Considering 31 commodity-producing countries, we find that the average net effect of a 1% increase in natural resource-seeking FDI was a 0.23% decline in the current account (measured as percentage of GDP). This surprising result can be explained by the repatriation of profits.

Taxing Investments in the Asia-Pacific Region: The Importance of Cross-Border Taxation and Fiscal Incentives

This article investigates the taxation of investments in the Asia-Pacific region. The authors’ analysis is based on the methodology of Devereux and Griffith (1999 and 2003) for determining effective average tax rates. This approach allows us to account for important domestic and international tax regulations. The results presented in this article show that for the tax law of 2014, the overall dispersion of effective tax burdens in the Asia-Pacific region ranges from 10.6% in Hong Kong to 40.4% in India for domestic investments (an overall average of 23.4%). In 8 out of 19 jurisdictions covered, investments are, however, effectively taxed at a rate between 20% and 25%. For foreign direct investment, international tax law regulations have a significant impact on the overall tax burden. In any of the Asia-Pacific jurisdictions, foreign direct investments by a Singaporean or a German parent company are on average taxed at 29.2% and at 32.8% in the case of profit repatriation to the United States. Meanwhile, tax incentives for the stimulation of private investment reduce the effective average tax rate by 8.6 percentage points on average. Fiscal incentives targeted at investments in the high-technology sector or the development of specific geographic areas result in the lowest effective tax burdens.

Book Review: The History of Democracy: A Marxist Interpretation by Brian Roper

Brian Roper The History of Democracy: A Marxist Interpretation, Pluto Press, London, 2013; 328 pp: 9780745331898, 17.50 [pounds sterling] (pbk) The work of Brian Roper in The History of Democracy is timely because it contributes to the ongoing debate with regards to the meanings and contentious re-appropriation of the word 'democracy', especially within the left. While the post-structural turn has been working systematically with this concept for more than three decades (we can cite the book Hegemony and Socialist Strategy: Towards a Radical Democratic Politics by Laclau and Mouffe, first published in 1985, as reference point), there has been a less clear systematic revision of the notion of democracy from a materialist perspective. The state has tended to occupy the centre of attention instead. And this is precisely Roper's objective: to study the historical forms of democracy in order to separate rhetoric from reality and argue in favour of a 'democratic alternative to capitalism by clarifying the role democracy has played' (p. ix). The author's point of departure is one shared by the left (in an ecumenical sense), i.e. the shift from Keynesianism to neoliberal policies represented a brutal transfer of wealth not only from workers to elites but also from less-developed states to developed economies, by mechanisms which include debt repayment and the repatriation of profits. The view on the relations between transnational corporations, foreign direct investment, developed and developing economies, is aligned with the thought of Raul Prebisch and dependency theory. The main cause of underdevelopment lies in the interdependent division of the structure of world capitalism between the centre and the periphery. But it is the new wave of social mobilisation globally encapsulated in the so-called 'global justice movement' - which spans the period from the protests in Seattle in 1999 up to the Arab Spring in 2010, and, we should add, the emergence of Syriza in Greece and Podemos in Spain--that makes debating democracy even timelier. In the light of these development, what is the alternative to the established order? Roper argues that the way out is neither Athenian (direct) nor liberal (representative) democracy but socialist participatory democracy, a self-governed, working-class majority, which combines the two historic forms of democracy but clearly aims to defeat capitalism (p. 1). Following a critical-realist methodological approach, Roper develops a critique to actually existing forms of democracy by studying the history of democracy. This method seeks to 'analytically penetrate the surface appearances of social reality in order to identify the underlying causes that generate these phenomenal forms and this centrally involves a complex process of retroduction (p. 4). Democracy is hence studied as an epiphenomenon of a dynamic totality that is 'internally complex, mediated and contradictory' (p. 7). The rejection of social reality perceived as 'fragments' but as part of a major 'totality', systemic, poses a fundamental contention against perspectives that are more sceptical of the actual analytical and political usefulness of grand (or total) narratives. However, it is coherent with the approach and objectives of the book. The author develops his argument in ten chapters preceded by a good introduction, which outlines the objectives and structure of the book. The first two chapters focus on the origins and first historical suppression of democracy, by the Athenians and Romans respectively, and sets the analytical tone for the rest of the book. For the author, the historical review contributes to differentiate democratic form from democratic substance, depending on who ultimately influences the organisation of power, the many or the few. …

Outward Foreign Direct Investment from Malaysia

The overall pattern of outward foreign direct investment from Malaysia indicates increasing participation in global outflows of foreign direct investment, especially to Southeast Asia. In 1980, Malaysia was ranked eleventh in the top fifteen developing and transition economies in terms of stocks of outward foreign direct investment, but it moved up to the tenth position by 2013. Outward flows surpassed inward flows after 2007 and Malaysia became a net capital exporter. This paper seeks to examine the pattern of outward foreign direct investment from the country, key motivations, and some of its impact. Government-linked companies are key players in these outward flows, especially in the oil and gas and services sector. The main findings in this paper show that outward investment from Malaysia is driven mainly by a horizontal, market-seeking type of investment while the literature indicates that its impact on trade is insignificant. Given the key role played by government-linked companies in outward foreign direct investment, an important return from these investments will be the repatriation of profits back to the home country. To promote greater transparency, these companies need to report to the public the returns and repatriation of profits on their investments abroad for Malaysia’s current and future development.

The Impact of Foreign Direct Investment (FDI) on the performance of the Agricultural Sector in Ghana

The impact of foreign direct investment (FDI) on the economic growth of host economies has attracted significant debate in the literature with empirical evidence being inconclusive. Sectoral analysis was therefore introduced in the literature to understand the heterogenous response of the performance of the various economic sectors to changes in the inflows of FDI as opposed to the impact of the latter on the whole economy. On the sectoral paradigm, very little attention has been given to the agricultural sector which holds the key to food security in the world and poverty reduction in developing economies such as Ghana where the sector employs majority of the active working population. In this respect, our study looked at the impact of FDI on the performance of the agricultural sector in Ghana with data over the period 1980 - 2013 using Johansen cointegration test. We found that FDI negatively impacts the agricultural sector productivity in the long run but with positive relationship in the short run. We also found that the depreciation of the cedi negatively impacts the growth of the agricultural sector in the long run. Trade openness on the other hand had positive and significant long run impact on the agricultural sector. We recommend that the government harnesses trade relations, stabilizes the local currency and ensures that FDI inflows to agriculture and the entire economy are not harmful to the economy by way of capital and excessive profit repatriations.

Foreign Direct Investment and Economic Growth in Cote D’Ivoire: A Time Series Analysis

<p class="ber"><span lang="EN-GB">This paper investigates the impact of foreign direct investment (FDI) inflows on economic growth in Cote D’Ivoire during the 1975-2011 period. The selection of this African nation is motivated by the rapid inflows it has experienced over the past decade. Using unit root and cointegration analysis, the resulting error correction model (ECM) suggests that gross fixed capital formation (GFCF) has a short-run positive impact on economic growth, while FDI, the repatriation of net income abroad, and periods involving structural breaks, have a negative effect on economic growth in Cote D’Ivoire. In addition, the negative error correction term indicates that deviations from long-run per capita growth during the current year are corrected relatively quickly in the following year, c<em>eteris paribus</em>. The unexpected negative effect of FDI on economic growth may be due to the significant repatriation of profits and dividends the country has experienced in recent years. </span></p>

Costs and Benefits of Foreign Direct Investment to Azerbaijan’s Economy: The Case of Oil Sector

Azerbaijan is a young republic with a developing economy. Despite the efforts of government programs and development of non-oil sectors in recent years, the oil sector is still the most important sector of the economy. Improvement in the oil sector is the main source of the developments in Azerbaijan’s economy. In this study, we present the role of the oil sector in Azerbaijan’s economy, investigate the foreign direct investment in Azerbaijan oil sector and analyze the costs and benefits of foreign direct investment in oil industry to the Azerbaijan’s economy. After a broad literature review, it is found that foreign direct investment in Azerbaijan oil sector results in some minor costs to economy such as crowding out, negative wage spillover, profit repatriation and dual economy effect. On the other hand, foreign direct investment in Azerbaijan oil sector has great benefits for the economy, especially in terms of significant developments at macroeconomic indicators such as rapid increase in GDP. Adding to economic growth, human capital contribution, competition level, technology transfer and management and governance practices are some other benefits of foreign direct investment in Azerbaijan oil sector in Azerbaijan’s economy.

Foreign Direct Investment (FDI) in Bangladesh

During the liberation war in 1971 a nationalist weave emerged which gives Bangladeshis a spirit of freedom and dignity of independence but it also results on more reserved position in case of economic policy. Policy makers at that period used to see foreign companies access with a negative eyes. Foreign investments were discouraged as a result foreign direct investment (FDI) inflow in Bangladesh till 1980 is very insignificant. The growth of Bangladesh's FDI inflow was around US$ 308 – 356 million for long fifteen years (1980 – 1995) which started with an amount of US $ 0.090 million in 1972. Afterwards this concept has been changed into a reverse position and government start encouraging foreign direct investment from 1990s. A series of policy incentives, investment sovereignty has been offered to the FDI investors including tax holiday for several years, duty free facility for importing capital machinery, 100% foreign ownership, 100% profit repatriation facility, reinvestment of profit or dividend as FDI, multiple visa, work permit to foreign executives, permanent resident or even citizenship for investing a specific amount, Export Processing Zone (EPZ) facility, and easy hassle free exit facility. Potential sectors of can attract more FDI are power generation, infrastructure development, private port establishment, joint venture with deep sea port establishment under PPP, ship building, ICT sector, call center, education, healthcare, mining, gas extraction, agro processed product, electrical & electronics, light engineering, and fashion designing etc. After so many incentives offered by the government till now FDI Inflow into Bangladesh is not at a satisfactory level. During last few years fresh FDI investment in not taking place. From the statistics of last few years it is quite clear that, reinvestment of locally earned profit is the major amount of FDI into Bangladesh. Fresh FDI inflow is decreasing day by day. Government has to investigate the issue and undertake necessary measures to increase fresh FDI into Bangladesh.

The Effect of Moving to a Territorial Tax System on Profit Repatriation: Evidence from Japan

In an increasingly globalized world, the design of international tax systems in terms of taxation on foreign corporate incomes has received much attention from policymakers and economists alike. In the past, Japan's worldwide tax system taxed foreign source income upon repatriation. However, to stimulate dividend repatriations from Japanese-owned foreign affiliates, Japan introduced a foreign dividend exemption in 2009 that exempts dividends remitted by Japanese-owned foreign affiliates to their parent firms from home taxation. This paper examines the effect of this dividend exemption on profit repatriations by Japanese multinationals. We find that the response of Japanese-owned affiliates to the dividend exemption was heterogeneous. More particularly, foreign affiliates with a large stock of retained earnings were generally more responsive to the reform and significantly increased dividend payments to their parent firms in response to the enactment of the dividend exemption system. Dividend payments by these affiliates also became more sensitive to withholding tax rates on dividends levied by host countries under the new exemption system.

Political Economy of Public Infrastructure Development in Ogun State , Nigeria ( 2003 - 2011 )

Infrastructure development has been a source of concern for most developing countries. The enormous resources needed to provide public infrastructure makes it prohibitive for countries with weak economies The inability of Nigeria to effectively manage it resources have also rub off on the development of public infrastructure in the country. Given the proposition of scholars that infrastructural development has a very strong relationship to economic growth as well as the well being of the poor in any developing societies, infrastructure development becomes both an economic as well as a political matter. The study investigated the political economy of infrastructure development in Ogun State, Nigeria from 2003 to 2011. Using in-depth interview of 52 respondents which included, key political functionaries, community leaders and private citizens, as well as observation carried out through visit of local government in the state, and documentary review of vital government publications, the study found that the adoption of direct labour approach led to drastic reduction in the cost of infrastructure development in the state. There was massive development of human capacity in the construction sector, as well as economic growth through boosting of the local economy as income and profits were ploughed back into the economy as against repatriation of profits by foreign construction companies. Other states and the federal government should adopt direct labour approach in order to achieve sustainability in infrastructure development, as well as economic development which it engenders.

Australian oil and gas: maximising inbound investments—tax risks and opportunities

The ability for Australia to attract and retain foreign capital is crucial to the continued expansion and long-term development and sustainability of Australia’s oil and gas industry. A well-known and accepted competitive advantage, which facilitates inbound investment into the Australian oil and gas industry, is the stability of Australia’s tax and regulatory system. Having said this, inbound investors are faced with numerous challenges in seeking to navigate and understand Australian tax issues associated with not only ensuring the successful completion of a transaction but to also manage their ongoing after-tax return on investment. These investors are exposed to Australia’s complex international tax landscape, given the level of cross-border investment, financing, profit repatriation, transfer pricing and exit/sell down issues. The key is for inbound investors to understand, monitor and pro-actively manage their international tax affairs as efficiently and effectively as possible. This extended abstract is targeted on assisting inbound investors to understand key considerations associated with investment ownership in the Australian oil and gas industry, and to assist those investors in making strategic investment decisions and to better understand tax risks and opportunities. The topics covered will include: Key tax drivers and considerations associated with executing transactions successfully. Structuring inbound oil and gas investments into Australia. Investment funding and profit repatriation strategies. Transfer pricing and related company transactions. Exit and sell down strategies.

Drivers of Peru's Equilibrium Real Exchange Rate: Is the Nuevo Sol a Commodity Currency?

This paper tests the hypothesis of ‘commodity currency’ on the nuevo sol and, more generally, identifies the drivers of Peru’s equilibrium real exchange rate using a cointegration analysis. The results show that export commodity prices do not have a statistically significant impact on Peru’s real effective exchange rate, suggesting that the nuevo sol is not a commodity currency. The paper provides empirical evidence that large profit repatriation and foreign exchange intervention have effectivelly insulated Peru’s real exchange rate from the impact of commodity price shocks. Peru’s equilibrium real exchange rate is found to be driven mostly by productivity and government consumption.

Drivers of Peru's Equilibrium Real Exchange Rate: Is the Nuevo Sol a Commodity Currency?

This paper tests the hypothesis of ‘commodity currency’ on the nuevo sol and, more generally, identifies the drivers of Peru’s equilibrium real exchange rate using a cointegration analysis. The results show that export commodity prices do not have a statistically significant impact on Peru’s real effective exchange rate, suggesting that the nuevo sol is not a commodity currency. The paper provides empirical evidence that large profit repatriation and foreign exchange intervention have effectivelly insulated Peru’s real exchange rate from the impact of commodity price shocks. Peru’s equilibrium real exchange rate is found to be driven mostly by productivity and government consumption.

Foreign Direct Investment (FDI) in Bangladesh: Trends, Challenges & Recommendations

During the liberation war in 1971 a nationalist weave emerged which gives Bangladeshis a spirit of freedom and dignity of independence but it also results on more reserved position in case of economic policy. Policy makers at that period used to see foreign companies access with a negative eyes. Foreign investments were discouraged as a result foreign direct investment (FDI) inflow in Bangladesh till 1980 is very insignificant. The growth of Bangladesh’s FDI inflow was around US$ 308 – 356 million for long fifteen years (1980 – 1995) which started with an amount of US $ 0.090 million in 1972. Afterwards this concept has been changed into a reverse position and government start encouraging foreign direct investment from 1990s. A series of policy incentives, investment sovereignty has been offered to the FDI investors including tax holiday for several years, duty free facility for importing capital machinery, 100% foreign ownership, 100% profit repatriation facility, reinvestment of profit or dividend as FDI, multiple visa, work permit to foreign executives, permanent resident or even citizenship for investing a specific amount, Export Processing Zone (EPZ) facility, and easy hassle free exit facility. Potential sectors of can attract more FDI are power generation, infrastructure development, private port establishment, joint venture with deep sea port establishment under PPP, ship building, ICT sector, call center, education, healthcare, mining, gas extraction, agro processed product, electrical & electronics, light engineering, and fashion designing etc. After so many incentives offered by the government till now FDI Inflow into Bangladesh is not at a satisfactory level. During last few years fresh FDI investment in not taking place. From the statistics of last few years it is quite clear that, reinvestment of locally earned profit is the major amount of FDI into Bangladesh. Fresh FDI inflow is decreasing day by day. Government has to investigate the issue and undertake necessary measures to increase fresh FDI into Bangladesh.

Opportunities and Challenges for Innovations in Qatar

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Revealing hidden attractions in a rural Kenyan periphery

Tourism geographers have noted the tendency for enclaves to develop in attraction-rich tourism zones and population centres. The accumulation of tourism in such enclaves can act to limit the spread of benefits to the most impoverished regions and their inhabitants. This research addresses the question of whether peripheral regions can utilise the inherent motivations of specific types of tourists in order to reveal hidden attractions and build sustainable tourism. Within the frameworks of enclave theory and complex systems analysis, this case study of a charitable field project in Gatarakwa, Kenya, utilises qualitative approaches including in-depth interviews, blog analyses and participant observational research to examine whether a philanthropist-as-tourist model could reveal hidden attractions and spread the benefits of tourism beyond the enclaves. It was found that the philanthropists’ religious motivations, cultural drives and desire to experience poverty and to assist in its alleviation enabled their broader engagement with the largely experiential offerings of the peripheral region. This created an alternative tourist attraction at no cost to the local community and with no repatriation of profits to foreign investors. The programme also created transferable job skills and had the potential to generate income for local businesses. If managed accordingly, such projects can reveal the attractiveness of peripheral areas of other developing countries and so spread the benefits of tourism more equitably.

Has the French 3% Contribution Become Compatible with EU Law and Tax Treaties?

As a first act of tax legislation under the presidency of François Hollande, the French government introduced an additional contribution to the French corporate income tax (CIT) equaling 3% of profit distributions and profit repatriations made by companies subject to French CIT. The contribution first applied on profit distributions and profit repatriations made on or after 17 August 2012. Given the economic similarity of the contribution to a regular dividend withholding tax, one can question the compatibility of the contribution with primary and secondary European Union (EU) law and French tax treaties. On 10 April 2013, the French Tax Authorities issued official guidelines, limiting the scope of the contribution. But did this limitation sufficiently address all doubts one can have about compatibility of the contribution with EU law and French tax treaties? One year after its introduction, the authors still find reason to shed a critical light on the contribution.

Form Follows Function? Evidence on Tax Savings by Multinational Holding Structures

I provide evidence on the group structures of multinationals and analyze to what extent these structures are tax efficient. While the corporate income tax can hardly be avoided if a subsidiary is active in a country, withholding taxes depend on the structure in which the subsidiary is embedded. By vertically inserting holding companies or adjusting the superior/subordinate relationship of subsidiaries, multinationals can often influence their total tax burden, especially regarding the repatriation of profits by means of dividends. I analyze group structures across 58 countries in the years 1996 to 2008 using the MiDi database provided by the German Central Bank (Deutsche Bundesbank). The results show that a higher withholding tax between two members of a group located in different countries increases the probability of indirect participation. However, in about half of the observations, the existence of an intermediate subsidiary does not lower the overall tax burden, and in 5% of the cases the tax burden on repatriated profits with such a holding company is even higher than without it. Although group structures generally seem to be tax driven, there are non-tax influencing factors which sometimes prevail. Besides drivers of the vertical company structure, I provide evidence of a horizontal driver: once a form of group taxation is available, groups seem to spread their national investments across more subsidiaries.

Liberalization of Investment and Human Development

Particularly throughout the 1990s, one important strategy relied on by countries lacking capital or seeking to improve their access to technology by attracting investors has been to conclude international investment agreements (IIAs). Such treaties usually include provisions relating to the scope and definition of foreign investment ; admission and establishment ; national treatment in the post-establishment phase (a guarantee of non-discrimination against the investor of the other Party established in one Party); the most-favoured nation clause (ensuring that the investor of the other Party will benefit from the same treatment as any other foreign investor) ; fair and equitable treatment, including a protection from expriopriation ; guarantees of free transfers of funds and repatriation of capitals and profits ; and dispute settlement provisions (State-State and State-investor). But how successful was such a strategy? Did it succeed in attracting investment? And even if it did, how can we assess the 'sovereignty costs', or the loss of 'policy space', associated with the conclusion of IIAs? If countries indeed compete for the arrival of foreign investment and if the conclusion of such agreements is one tool they rely on to gain an advantage on potential competitors, does this entail the risk that the concesssions they make will go too far, for example by renouncing the possibility of imposing performance requirements on the investor (though this could arguably strengthen the linkages with the host economy), by guaranteeing a freeze in the regulatory framework applicable to the investment, or by authorizing transfer pricing between the local subsidiary and the foreign-based parent, thereby reducing the fiscal revenues that could be gained from the arrival of the foreign investor? By concluding an investment agreement, a country signals its intention to respect the rights of investors and to create a legal and policy framework that will provide the kind of stability they usually expect. But could it be that, while it may be understandable for each country considered individually to seek to conclude IIAs with a view to attracting investors, the result is collectively sub-optimal, as the IIAs lose their signalling function once they come to be generalized?We conclude that IIAs are not decisive in attracting investment. FDI inflows are generally dependent on other variables, especially the size of the market in the host country or trade openness ; and although a predictable and safe legal environment does matter to the investor, such predictability can be provided by other means (the more a country's traditional respect for the rule of law is established, the less it shall have to resort to investment treaties that protect the rights of investors). Moreover, if IIAs make any difference, it is especially in the extractive industry where very large investments are made, that are 'sunk' at the early stages of the project, and that are only profitable after a long period of time, leading the investor to be particularly risk-averse. It would therefore be ill-advised for countries seeking to attract investment to do so by providing incentives in investment agreements, especially where such incentives are designed in a way that could be interpreted as exempting the investor from having to comply with requirements linked to human rights, or to social and environmental considerations. Such incentives are no substitute for the establishment of an attractive macro-economic and business climate, and they may in fact even be counter-productive as regards the immediate aim of attracting investors (let alone as regards the more ambitious aim of human development) if, as a result of entering the country, the investor would be risking its reputation and subject itself to criticism because of the laxity of the standards applied. It is therefore entirely justified, even from the point of view of the attractiveness of a country to investors, to seek to explore which safeguards should be established under the domestic law of host countries in order to ensure that the arrival of FDI shall not negatively affect the rights of the local population, and shall instead contribute positively to human development indicators in the country ; and it is fitting for capital-exporting countries and for agencies such as export credit agencies or multilateral lending institutions to support this effort. Far from limiting the sovereignty of the countries seeking to attract investment, these tools are used in order to strengthen the bargaining position of these countries: they are a way to support them in making the choices that should benefit their populations most, when these countries could otherwise be tempted to 'signal' their willingness to attract investors by providing far-reaching forms of protection that reduce their policy space, or to offer advantages that will annul, or at least seriously diminish, the benefits they have a right to expect from the arrival of FDI.