FOREIGN_DIRECT_INVESTMENT.doc - “To understand today’s politics one must always begin with yesterday’s economics.” ‘Jamaica Struggle in the

FOREIGN_DIRECT_INVESTMENT.doc - “To understand today’s...

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“To understand today’s politics one must always begin with yesterday’s economics.” ‘Jamaica: Struggle in the Periphery’ , Mr Manley’s fourth book, published 1982 FOREIGN DIRECT INVESTMENT In the 1970s about 150 developing countries joined together in an effort to develop a corporate policy on investment. However, they did not establish a multilateral treaty and so the developed world embarked on a path of divide and rule. They entered into several bilateral treaties with the developing world which allow developed countries to invest in developing countries in a wide range of activities, for example, telecommunications, the hotel industry, multinational corporations, the education sector etc. These bilateral investment treaties are agreements establishing the terms and conditions governing private investment by individuals or companies of a developed country (capital exporting) in a developing country (capital importing). The country from which the investor comes is called the home country while the country in which he invests is called the host country. A typical bilateral investment treaty contains the following provisions: 1. Treatment standards- Foreign investors are entitled to the same treatment and benefits as national companies. This is called national treatment. Each investor is also entitled to the same treatment as investors from other countries. This is called most favoured nation treatment. Generally, all investors are entitled to fair and equitable treatment. 2. Expropriation- The host state shall not expropriate or nationalize foreign investments either directly or indirectly, except for a public purpose and in a non- discriminatory manner (i.e. if the host country nationalizes one investor’s
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