Template-type: ReDIF-Paper 1.0
Author-Name: Chang, Ha-Joon
Author-Workplace-Name: Faculty of Economics and Politics, University of Cambridge
Title: Regulation of Foreign Investment in Historical Perspective
Abstract: Based on a historical survey of the experiences of the USA, the EU member states
	 and the East Asian economies, the paper argues that during their early stages of
	 development, now-developed countries systematically discriminated between domestic
	 and foreign investors in their industrial policy. They have used a range of
	 instruments to build up national industry. They included: limits on ownership;
	 performance requirements on exports, technology transfer or local procurement;
	 insistence on joint ventures with local firms; and barriers to 'brownfield
	 investments' through mergers and acquisitions. On the basis of this, the paper
	 argues that a multilateral investment agreement (MIA) at the WTO, founded on
	 principle of national treatment, is likely to harm the developing countries' 
	 prospects for development. Our historical survey shows that, only when domestic
	 industry has reached a certain level of sophistication, complexity, and
	 competitiveness do the benefits of non-discrimination and liberalisation appear to
	 outweigh the costs. As a result, countries generally move towards a greater degree
	 of non-discrimination and liberalisation as they develop. In that sense, contrary
	 to the claims of the demandeurs of the MIA non-discrimination is better seen as an
	 outcome of development, not a cause
Keywords: Foreign Investment, Agreements, MIA, Economic History, Competitiveness,
	 Developing Countries 
Series: Discussion Paper
Creation-Date: 2003
Number: 2003-12
File-URL: https://www.merit.unu.edu/publications/discussion-papers/2003-12.pdf
File-Format: application/pdf
File-Size: 114 Kb
Handle: RePEc:unm:unuint:200312