Labour and Employment Issues in Foreign Direct Investment: Public Support Conditionalities
Multinational Enterprises Programme Working Paper No. 95
This paper explores the issue of public support for foreign direct investment (FDI) and its conditionality with respect to labour and employment issues. Three areas are examined, with the following general results:
International investment agreements: as these are agreements between States, they do not create direct obligations for investors. Some bilateral agreements suggest respect for internationally recognized human rights, but these are not binding obligations.
Overseas investment insurance: public export credit agencies widely provide insurance for domestic investors going abroad to cover political risks. As this is a domestic transaction between the ECA and the investor, home state social standards can and often do apply to these contracts.
Development Finance: public support for foreign investment is at its strongest with the direct provision of finance. As this is also a domestic transaction, public actors are freer to attach social conditionalities.
International investment agreements: as these are agreements between States, they do not create direct obligations for investors. Some bilateral agreements suggest respect for internationally recognized human rights, but these are not binding obligations.
Overseas investment insurance: public export credit agencies widely provide insurance for domestic investors going abroad to cover political risks. As this is a domestic transaction between the ECA and the investor, home state social standards can and often do apply to these contracts.
Development Finance: public support for foreign investment is at its strongest with the direct provision of finance. As this is also a domestic transaction, public actors are freer to attach social conditionalities.