Catálogo de publicaciones - libros

The main conclusion of the positive analysis of FDI policy competition in Europe presented in Chapter 3 is that the EU possesses a sophisticated competition framework that represents a “considerable success in cooperation and policy coordination”. It suggested that EU institutions and governance mechanisms in this area are, in principle, well designed to be effective monitoring and enforcement mechanisms to support the goal of establishing arrangements for contract governance to save on transaction costs. The following section takes a closer look at the extent to which the overall EU competition framework also represents an effective solution to overcome FDI policy competition issues.

The process of current and future enlargement of the EU adds another dynamic element to the challenges facing the Commission in reforming the existing framework for FDI competition. Here, the balancing act for accession countries and the EU alike is to align the (mostly non-conforming) FDI policies and instruments in the new member countries with the EU competition , while at the same time allowing the newcomers to maintain a competitive framework for FDI. An effective solution to this issue will depend both on substance as well as the overall approach applied to the process of policy integration. The following sub-chapter will address these issues from an institutional point of view, backed by empirical data.

The chapter so far has examined in detail the overarching research question of the dissertation, i.e., to what extent does the current EU institutional framework provide an effective and efficient solution for FDI policy competition between governments under changing conditions for global foreign direct investment as well as current and future rounds of EU enlargement. The last section will summarize the arguments that support the thesis that institutional governance instruments of FDI policy competition in the EU are overstretched and in need of reform, and suggest potential normative solutions to overcome these institutional weaknesses. The chapter will conclude by reviewing the global context surrounding this policy agenda, which shall also serve as segue into the political economy of FDI policy competition presented in the following Chapter 5.

In his book, “U.S. Power and the Multinational Corporation”, Gilpin (1975) asserts that the trouble with removing the artificial line that separates the political and economic sub-systems lies in the fact that “economists do not really believe in power, [and] political scientists, for their part, do not really believe in markets”. Indeed, since Gilpin’s first attempt thirty years ago to establish a political economy of foreign investment, much of the writing by economists and political scientists on that subject has been “as if they were talking about entirely different sets of actors and activities”. The following analysis assumes the relationship between economics and politics to be a reciprocal one, and should therefore be understood as an attempt to qualify FDI governance-related suggestions made in previous normative sections in the context of international and domestic politics.

Charlton (2003) suggests that policy-makers faced with establishing cross-national or cross-jurisdictional FDI governance measures are confronted with three general choices, depending on their level of ambition and resources: (1) creating transparency enhancing measures; (2) establishing cooperation between jurisdictions; and (3) instituting binding and enforceable multilateral rules. The following section reviews these options from a regime-theoretic view.

The prior discussion of institutional policy choices for FDI governance led to the conclusion that reaching agreement on any of these options — even the most simple ones such as creating a more transparent and accountable system of subsidy controls — will not take place unless there is a sufficient balance of domestic interests and power capabilities as well as an appropriate regime design that ensures mutual trust and discourages opportunistic behavior. In that context, the EU framework does not only present itself as an effective mechanism of bounded FDI competition but also provides important lessons on the political-economic process for reaching consensus on the choice of FDI governance model. The final section will thus review the most important factors that contributed to the process and its outcomes, both in terms of overall guiding-principles of the institutional environment (“rules of the game”) as well as the more specific governance approach (“play of the game”) that informed the EU’s course. In conclusion, recommendations will be given as to whether or not the EU approach can serve as a model for the establishment of other FDI regimes.

The main purpose of this dissertation was to elucidate the issue of economic competition between jurisdictions for mobile investment. More specifically, the focus was on those institutional factors shaped by government influence and behaviour that compete with each other in the realm of global locational tournaments. This process, termed institutional competition, was analyzed through the methodological framework of the New Institutional Economics which posits that institutions matter in reducing uncertainty and structuring human exchange, and as such helped to address the underlying questions of strategic behaviour and global coordination problems inherent in FDI policy competition. Using the example of the EU’s competition framework, the main research question aimed to determine whether or not a multilateral system of investment rules can be economically and politically effective as well as to address the corollary question of what constitutes a viable arrangement for inter-jurisdictional and inter-regional FDI governance.