We quantify the impacts of a potential Investment Facilitation for Development (IFD) Agreement under negotiation at the World Trade Organization (WTO). The analysis is based on an innovative multiregion general equilibrium simulation model including bilateral representative firms. Consideration is given to foreign direct investment (FDI) and monopolistic competition. The model shows empirically relevant gains associated with removal of investment barriers in the form of transaction costs faced by foreign investors. The expected global welfare gains range between 0.56% and 1.74% depending on the depth of a potential IFD Agreement. The benefits are concentrated among the participants of the agreement with the highest welfare increase for the low-income and middle-income countries. Notable spillovers accrue to nonparticipants, which can be further increased by joining the agreement. Our results contribute to the relatively scarce research on investment facilitation and provide policymakers with information on the potential effects of the negotiated IFD Agreement.

This chapter examines how the facilitation of foreign direct investment (FDI) through the World Trade Organization (WTO) can contribute to fulfilling the right to development and achieving UN Sustainable Development Goals. It assesses how the WTO facilitates investment related to sustainable development in developing countries through liberalization of trade in services, restrictions on trade-related investment measures, and promotion of intellectual property rights. The study finds that reform efforts to make these WTO disciplines more conducive to sustainable development have been slow and of limited significance. The chapter also looks at how investment is facilitated through investment treaties and domestic investment legislation, highlighting the importance of domestic investment legislation for promoting investment for sustainable development, particularly for least developed countries. Finally, the chapter discusses whether and how the draft WTO Investment Facilitation for Development Agreement can most effectively achieve its objective in relation to countries most in need of development-related investment, considering the relative roles of the home and host states of FDI.

This chapter investigates how ‘society at large’ interacts with the world of international arbitration, now and for the foreseeable future. This broad topic can be made more manageable by breaking down the interaction through four focus groups within society: the media, academia, arbitration ‘clubs’, and civil society NGOs. These groups provide services to the world of international arbitration but are mostly instead what Emmanuel Gaillard terms ‘value providers’ – seeking to influence its normative structure. This chapter also touches on international and professional organisations, which are also significant value providers.

One key question is whether and how international arbitration may be expanding or at least becoming more visible through the four focus groups. A second is whether it may be becoming more diverse and indeed polarised. The chapter presents empirical evidence of ongoing ‘lawyerisation’, hence renewed concern about costs and delays. It also considers the impact of burgeoning investor-state dispute settlement (ISDS) cases and coverage, especially in the general media. Analysis of newspapers in Australia and the United Kingdom as well as social media reports confirms that views about ISDS remain overwhelmingly negative – a new development that could increasingly shape the overall perceptions of international arbitration held within society at large.

After establishing why people migrate, in this chapter we turn to an investigation of how migrants economically re-engage with their homeland. Specifically, we explore how migrants facilitate flows of international financial capital. We argue that migrants, because they possess critical knowledge about investment opportunities in their homelands, help international investors overcome information asymmetries which drives both portfolio and foreign direct investment into their homelands. Our empirical analyses leverage a wide range of data on migrant stocks and portfolio and foreign direct investment to test our argument. We find that migrants are key to explaining international capital flows, especially in environments where formal political institutions that protect property rights are absent or weak.

We provide selective account of how and why the share of Asia in the world economy has more than quadrupled in the past half-century. In 1970, Asia (excluding Japan) accounted for around 9 per cent of the world economy. At the turn of the twenty-first century, this had climbed to 18 per cent and today exceeds 40 per cent. Asian growth has occurred rapidly regardless of political system, institutional arrangements or policy cocktails. We illustrate how far the Asian economies have come and how far they have left to go to attain the living standards of Europe or North America. For example, in India and China income per capita went from just under 5 per cent of the US level each to around 11 per cent and 28 per cent, respectively from 1970 to 2020. The main drivers of growth have been the accumulation of capital and labour along with improvements in the quality of the labour force. We also concentrate on the features that are both a cause and a consequence of the connections world. These include export-led growth, the role of the state, political systems and economic institutions, but also inequality. In so doing, we set the scene for the chapters that follow.

We find that most Asian economies are not very innovative by international standards, though in line with their level of development. Asian economies mostly obtain their technologies from abroad through FDI or via technological diffusion. However, FDI to Asia has been modest and entrepreneurship limited, largely as a consequence of the connections world. Politicians and business groups have been mutually supportive in erecting barriers to entry. As a result, most innovation has been within business groups or by new firms entering new sectors where existing business groups were absent or had not managed to erect unscalable entry barriers. However, three countries have developed some base for innovation: China, India and South Korea. In each, efforts to construct a supportive ecosystem, including policies for education, science and technology, as well as encouraging returning migrants with knowledge, are reaping dividends. Each has adopted a rather different model which we discuss in detail. Despite these achievements, the power and influence of the connections world in these three countries also remains a serious brake on their ability to innovate in the future.

Both the knowledge and technology diffusion literature largely focus on adoption and adaptation at country and firm levels. The literature on how knowledge and technology are transferred, adopted and adapted at the level of the individual remains under-researched. Based on a unique employees and managers MNE in Ghana in 2015 and using social network analysis, this chapter examines the transfer of knowledge at the individual level and presents new evidence on the role of managerial knowledge diffusion from MNEs to host countries. Our results indicate that knowledge flows occurs from MNEs to local people. We, however, found that foreign knowledge transfer, particularly from Chinese MNEs and EU MNEs, is similar. The results also suggest that firm network structures influence knowledge transfer within firms, with the more decentralized MNEs and local workers in Chinese MNEs tending to perform better. In terms of policy recommendation, the chapter suggests that trade policies must focus on the stimulation of FDI inflows through MNEs that have decentralized subsidiary structure as they tend to serve as a better conduit for knowledge transfer to local employees

Foreign knowledge and technology enhance the technological capability of local firms. Foreign direct investment (FDI) and Multinational enterprises (MNEs) are key channels through which foreign knowledge flows and is transferred. This chapter reviews different types of foreign knowledge sources and the factors that ensure success in the adaption of foreign know-how to the local context. The results show that formal firms tend to have higher local technological capability are more likely to adopt and adapt foreign knowledge and technologies. Interaction with foreign firms through imports and collaboration are important sources of knowledge. The managerial localisation strategies in Chinese firms is also identified in our case study to offer an essential learning potential for local firms.

In Chapter 7, we focus on the domain of foreign direct investment (FDI). We claim that states often refrain from sharing sensitive economic information, even though it can be important to adjudicating investment disputes. We demonstrate that properly designed IOs, such as the International Centre for Settlement of Investment Disputes (ICSID), can ameliorate this problem by receiving and protecting sensitive information. We assess our hypotheses using new data on specific pieces of information shared – along with information withheld – from this institution. Specifically, we pair a measure of redactions in publicly released panel reports with qualitative case evidence. We show that key reforms designed to safeguard sensitive information increased the provision of this information and boosted FDI, especially in areas where sensitive information is particularly common. We conclude the chapter by discussing how solving this pervasive issue puts international investment institutions in tension with the normative goals of transparency and accountability.