Foreign Direct Investment and Human Development: The Law and Economics of International Investment Agreements

This book presents original research that examines the growth of international investment agreements as a means to attract foreign direct investment (FDI) and considers how this affects the ability of capital-importing countries to pursue their development goals. The hope of countries signing such treaties is that foreign capital will accelerate transfers of technologies, create employment, and benefit the local economy through various types of linkages. But do international investment agreements in fact succeed in attracting foreign direct investment? And if so, are the sovereignty costs involved worth paying? In particular, are these costs such that they risk undermining the very purpose of attracting investors, which is to promote human development in the host country? This book uses both economic and legal analysis to answer these questions that have become central to discussions on the impact of economic globalization on human rights and human development. It explains the dangers of developing countries being tempted to ’signal’ their willingness to attract investors by providing far-reaching protections to investors’ rights that would annul, or at least seriously diminish, the benefits they have a right to expect from the arrival of FDI. It examines a variety of tools that could be used, by capital-exporting countries and by capital-importing countries alike, to ensure that FDI works for development, and that international investment agreements contribute to that end.

This uniquely interdisciplinary study, located at the intersection of development economics, international investment law, and international human rights is written in an accessible language, and should attract the attention of anyone who cares about the role of private investment in supporting the efforts of poor countries to climb up the development ladder.

Olivier De Schutter is the UN Special Rapporteur on the right to food since May 2008. He is a Professor at the Catholic University of Louvain and at the College of Europe (Natolin). He is also a Member of the Global Law School Faculty at New York University and is Visiting Professor at Columbia University.

Johan F. Swinnen is Director of LICOS-Center for Institutions and Economic Performance at the University of Leuven, Senior Fellow at the Centre for European Policy Studies in Brussels, and Visiting Professor in Stanford University. Previously, he was Lead Economist at the World Bank and Economic Advisor to the European Commission.

Jan Wouters holds the Jean Monnet Chair Ad Personam on EU and Global Governance at the KU Leuven, where he is Professor of International Law and International Organizations. He is the Director of the Leuven Centre for Global Governance Studies　- Institute for International Law, University of Leuven, and chair of the Flemish Foreign Affairs Council.