2002 A RECORD YEAR FOR LIBERALIZING FDI LAWS AND REGULATIONS

2002 A RECORD YEAR FOR LIBERALIZING FDI LAWS AND REGULATIONS

(Reissued as received.)

GENEVA, 21 August (United Nations Conference on Trade and Development) -- In an effort to attract foreign direct investment (FDI), countries are increasingly improving their investment climates, judging by the record number of changes introduced into national laws and bilateral instruments signed last year.

Between January 1991 –- when UNCTAD first began compiling the data -– and December 2002, a total of 1,641 measures were introduced by 165 countries, 95 per cent of them representing changes more favourable to FDI (table 1).

Last year alone, a record 248 such measures were adopted, by 70 countries.  This figure is up 19 per cent from 208 measures in 2001 and 65 per cent from the 150 measures introduced in 2000.

An overwhelming majority of these 248 measures -– 236 -– amount to a more favourable treatment of FDI.  More specifically:

-- 76 of the 248 measures were promotional in nature, including incentives;

-- 49 provided further protection to FDI and foreign investors;

-- 92 provided for more liberal entry and operating conditions;

-- 19 involved more sectoral liberalization; and

-- 12 led to greater government control.

These national measures were complemented by international efforts, especially through the conclusion of bilateral investment treaties (BITs) for promoting and protecting foreign investment in the partner countries (box) and double taxation treaties (DTTs) for the avoidance of double taxation on income and capital in the partner countries.

In 2002, 82 BITs were concluded by 76 countries, raising the total number concluded to 2,181 as of 1 January 2003.

During the same year, 68 DTTs were signed by 64 countries, raising the total number to 2,256 as of 1 January 2003 (figure 1).

Based on the number of treaties per country in each region, developed countries lead other regions for both BITs and DTTs, having concluded 45 and 64 per country, respectively.  Central and Eastern Europe (CEE) is next (with 38 BITS and 32 DTTs), followed by Asia and the Pacific, with 18 and 15 (tables 2 and 3).

Box. The contents of BITs

The scope and content of BITs have become more standard over the years. Today, the main provisions deal with the scope and definition of foreign investment; admission and establishment; national treatment in the post-establishment phase; most-favoured-nation treatment; fair and equitable treatment; guarantees and compensation in the event of expropriation; guarantees of free transfers of funds and repatriations of capital and profits; and dispute settlement provisions, both State-State and investor-State. But given the sheer number of BITs, the formulations of individual provisions remain varied, with different wording used for BITs signed some decades ago and those signed more recently.

Source: UNCTAD.

This press release was prepared in the context of the World Investment Report 2003.  FDI Policies for Development: National and International Perspectives, to be released 4 September 2003 at 17:00 GMT. For more information: www.unctad.org/wir/index.htm.

Contact: Press Office, tel.: +41 22 907 5828, e-mail: press@unctad.org, www.unctad.org/press; or K. Sauvant, tel.: +41 22 907 5707, fax: +41 22 907 0498, e-mail: karl.sauvant@unctad.org.

Table 1.  Changes in FDI laws and regulations, 1991-2002

(Number)

Figure 1.  Number of BITs and DTTs concluded, per year and cumulative,

1990-2002

Source: UNCTAD

Table 2. Number of BITs per country, by region, end 2002

Source: UNCTAD.

Table 3. Number of DTTs per country, by region, end 2002

 

Source: UNCTAD.

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