Towards A Southern Agenda on Investment

The document analyzes the investment regimes of Argentina, Brazil, South Africa, Malaysia, and Thailand, highlighting that bilateral investment treaties (BITs) are not always necessary to attract FDI. It identifies systemic challenges, including the 'disorder' of overlapping international obligations, the lack of data on FDI's impact on poverty and sustainable development, and the tension between investor-state arbitration and domestic policy goals like Black Economic Empowerment in South Africa.

• In Argentina, a period of liberalization and privatization led to a high volume of FDI, but the country has struggled with the enforcement of environmental regulations and the lack of domestic linkages. This experience suggests that FDI does not automatically benefit domestic firms, as linkages depend on the 'absorption capacities of local firms'.
• Argentina has faced significant legal challenges following its financial crisis, with approximately thirty international arbitrations launched by foreign investors. The Argentine government has contested these, arguing that disputes should be handled within the national legal system, though arbitral tribunals have rejected these objections.
• Brazil's experience demonstrates that international investment treaties are not a primary driver for attracting investment; the country has not ratified any of the BITs it signed, relying instead on WTO agreements on services and trade-related investment measures.
• South Africa's investment history shows that large-scale FDI can occur without bilateral investment treaties, as evidenced by investments from the US and UK. However, the country under-performs in attracting its fair share of FDI despite an open regime, suggesting that 'mere liberalization' is insufficient.
• In South Africa, there is concern that international investment treaties could hinder the implementation of Black Economic Empowerment (BEE) policies, especially since some treaties lack exceptions for racial equality policies and dispute settlements are often conducted in secrecy.
• Malaysia employs a discretionary approach to investment by avoiding a general investment law, allowing authorities to screen and channel FDI to serve specific domestic economic and social goals, including privileges for ethnic Malays and other indigenous groups (Bumiputras).
• Thailand's use of fiscal incentives to attract FDI may be inefficient; one study indicated that 70% of investments would have proceeded without such incentives. Additionally, the separation of authorities granting incentives from those collecting revenue may lead to an over-disbursement of tax holidays.
• There is a systemic 'disorder' in international obligations where developing countries sign various model agreements from different developed nations without coordination. This creates uncertainty regarding the scope of agreements and allows investors to potentially 'cherry-pick' provisions via the most favoured nation principle.

APA

International Institute for Sustainable Development (2004). Towards A Southern Agenda on Investment. https://www.iisd.org/system/files/publications/investment_sai_sum.pdf

Chicago

International Institute for Sustainable Development. Towards A Southern Agenda on Investment. 2004. https://www.iisd.org/system/files/publications/investment_sai_sum.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Towards A Southern Agenda on Investment |date=May 2004 |url=https://www.iisd.org/system/files/publications/investment_sai_sum.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2004towards, author = {{International Institute for Sustainable Development}}, title = {{Towards A Southern Agenda on Investment}}, institution = {International Institute for Sustainable Development}, year = {2004}, month = may, url = {https://www.iisd.org/system/files/publications/investment_sai_sum.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }