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International Investment Perspectives 2006

image of International Investment Perspectives 2006

This annual report reviews recent developments in international direct investment, includes recent statistics and highlights policy responses that will help countries reap the full benefits of investment.  This edition's special focus is on legal and policy issues arising from international investment agreements.  The articles in this section investigate novel features of recent bilateral investment treaties; options for improving the system of investor-state dispute settlement; and the consolidation of claims as an avenue for improving investment arbitration.   Other articles in this volume cover how new technologies are a force advancing the closer integration of national economies;  the challenges and opportunities for policy makers that arise from international investor participation in infrastructure; recent evidence of source (or "home") country benefits of outward direct investment; and the role of the OECD peer review process in building investment policy capacity.

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Outward Direct Investment

What Benefits to the Home Countries?

This article, taking OECD work from the early 1990s as a starting point, updates new evidence on the effects of outward direct investment on the home economy. Focusing on three possible impacts, namely employment, foreign trade and technology transfers, it finds that outward investment almost invariably has a beneficial macroeconomic effect. Outward investment generally boosts exports as companies trade with their foreign affiliates, and in some cases investment abroad in the context of strategies equally aimed at boosting trade. Employment in the home economy also tends to benefit from outward investment, although this may not always be the case within the investing sector itself. A bit more uncertainty still relates to the technology effects. Some companies invest to acquire know-how abroad, while others do so to undertake knowledge-based activities such as research and development away from their home country. The latter generally benefits the investing enterprise, but the broader societal benefits are elusive.

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