This chapter introduces the concept of performance requirements and investment incentives as used to structure the nature and extent of FDI by host states. It will consider the stated goals, potential benefits and criticisms of various categories of these policies, based on a wide range of economic studies.
Browse by title
This book assesses the way in which performance requirements and investment incentives are regulated by international economic law, consisting of the law of the World Trade Organization (WTO) and international investment agreements (IIAs). The central argument of this book is that the existing international regulatory regime governing these policy instruments is insufficiently robust to prevent their abuse by states seeking to protect weak industries and by mobile firms exploiting host states which need to attract foreign direct investment (FDI). This book will suggest that the lack of international coherence on the control of performance requirements and investment incentives has prevented states from using them in a manner that is economically advantageous on a domestic and, by extension, global scale. The manner in which performance requirements and investment incentives are regulated by international economic law is contentious, because these policies allow states to control the nature and extent of FDI in and out of their territory, very often leading to distortions in international markets as well as misallocated resources in the domestic economy. At the same time, these conditions are key manifestations of economic sovereignty and can represent useful instruments of domestic economic and social policy in limited circumstances. This is true both in emerging markets, which are often vulnerable to the effects of globalization, and in developed states, where they may be used in response to discrete, socially-damaging downturns in particular industries or regions. Drawing on the economic and business literature, this book will recommend a balanced, socially collaborative approach to the regulation of performance requirements and investment incentives that is mindful of the need for case-by-case evaluations of individual policies with input with a range of affected stakeholders.
Zenichi Shishido, Munetaka Fukuda and Masato Umetani
The introduction begins by laying a foundation for the book, introducing the concept of federalism broadly, as well as environmental federalism specifically, in the interest of making the book more accessible to students and non-academic readers. This is followed by a brief overview of each chapter and explanation of how the editor has endeavored to organize them for this book.
Stephan W. Schill, Christian J. Tams and Rainer Hofmann
Robert L. Glicksman and Jessica A. Wentz
This chapter describes how the Clean Air Act (CAA) lays the foundation for US cooperative environmental federalism programs. The CAA was the first federal pollution law to significantly expand the federal government’s role beyond providing information and financial assistance to the states and regulating interstate pollution. At the same time, the Act preserved an important policy-making role for states choosing to participate. Despite its path-breaking federalism structure, the CAA’s approach is sometimes misunderstood, as reflected in stunning mischaracterizations of that structure in recent judicial decisions, including an important Supreme Court case. To set the record straight, the chapter explores why Congress embarked on this cooperative federalism venture, emphasizing the manner in which the CAA responds to collective action problems. It also evaluates the CAA’s implementation, identifying CAA cooperative federalism success stories that include the leadership provided by states such as California in regulating pollution from motor vehicles and, potentially, state and regional efforts to restrict greenhouse gas emissions that contribute to climate change. Its failures include the persistent inability of some states to achieve the national ambient air quality standards and, ironically given its early provenance, the program to control interstate pollution. The chapter concludes by assessing whether the CAA’s cooperative federalism model is a good fit for mitigating greenhouse gas emissions that contribute to climate disruption and suggesting alternative mechanisms for addressing intractable air pollution problems.