Dr. Tharanath & Priya A. Jagadish
Abstract
In theory and in law objective of Bilateral Investment Treaties (BIT) is to encourage and protect investment in both countries. In case of BIT between the developing nation and an industrialized state, the industrialized country will be the source and the developing country will be the recipient of virtually all investments undertaken. Many developing countries desperately short of capital, would strongly oppose any measure that encourage their own nationals to invest their capital abroad rather than at home. It is for this reason, the title of certain BITs refer to ‘Encouragement and reciprocal protection of Investments’ rather than more common resignation, reciprocal encouragement and protection of investments. Developing countries often compete for foreign investment with the hope that foreign direct investment (FDI) will bring a wide range of economic benefits. These benefits include increased levels of investment and economic activity, working training, well paid jobs and technology transfers that enhance the productivity of local firms. In addition, foreign investment may be viewed as a particularly attractive means of increasing developing country investment stocks since foreign investment is much less likely than other financial flows to leave the host country if the host experiences a financial crisis. Although multinational firms may have negative effects on host country market such as intensified competition with local firms, policy makers generally assume that FDI is beneficial on net. Developing countries often compete for foreign investment with the hope that foreign direct investment (FDI) will bring a wide range of economic benefits. These benefits include increased levels of investment and economic activity, worker training, well-paid jobs and technology transfers that enhance the productivity of local firms. In addition, foreign investment may be viewed as a particularly attractive means of increasing developing country investment stocks since foreign investment is much less likely than other financial flows to leave the host country if the host experiences a financial crisis. US Ambassador to India Richard Rahul Verma at the conference organised by Society of Indian Law Firms said “The absence of a bilateral investment treaty between our two countries is an impediment to growing our trade and investment.” There has been “significant progress” in the ease of doing business scenario in India.” We think it is important because it would contribute to economic growth and foreign direct investment. I think you need to look at other countries in Asia as well in Europe in Latin America and see whether the wall that currently exists on professional legal services is still the right thing if you want to grow the two-way trade number, if you want to attract more businesses and more professionals into India.
Keywords: Bilateral Investment Treaties, BIT, FDI, Society of Indian Law Firms, Investment Plans
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