Bridging the Gap
Edited by Stephan W. Schill, Christian J. Tams and Rainer Hofmann
Chapter 5: UNCTAD’s effort to foster the relationship between international investment law and sustainable development
Foreign direct investment (FDI) is one of the main drivers of the global economy. Global FDI flows reached USD 1.45 trillion in 2013 and they are expected to grow to USD 1.7 trillion in 2015. The positive correlation between FDI and development has long been acknowledged in economic and political circles. In contrast, the question about the relationship between international investment law (IIL) and development – more specifically sustainable development – has emerged relatively recently and remains an issue of debate. How has IIL evolved and how does it relate, if at all, to development? In Part II, this chapter sketches the way the relationship between investment and development has evolved and how this evolution has influenced the role of IIL. Part III highlights some of the developments that have prompted calls for a reassessment of the purpose and functioning of IIL. Part IV then introduces the contribution of the United Nations Conference on Trade and Development (UNCTAD) to investment, development and the role of IIL. Part V offers a brief conclusion. Already in 2002, the Monterrey Consensus synthesised the positive correlation between FDI and development by affirming that FDI plays a key role in financing sustained economic growth and that it is especially important for its potential to transfer knowledge and technology, create jobs, boost overall productivity, enhance competitiveness and entrepreneurship, and ultimately eradicate poverty through economic growth and development.
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