Abstract
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.603 The following section reviews these options from a regime-theoretic view.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
See CHARLTON (2003), p. 27. Note that Charlton only discusses the first two options.
See KOKKO (2002), p. 6.
See CHARLTON (2003), p. 28.
See OMAN (2000), pp. 122–123.
The BIAC survey presented in Chapter 4 suggested that firms welcome a transparent incentive setting as it creates a more level-playing field vis-à-vis competitors as well as improves the firm’s strategic position when bargaining with governments. CHARLTON (2003) suggests that it can also improve the government’s position during the bargaining process. Overall, both governments as well as firms are likely to gain from a more transparent environment, which makes a real assessment and comparison of project-related costs and benefits possible.
See CHARLTON (2003), p. 28.
In game theory, a Nash equilibrium denotes a strategic game situation, where no player can benefit from unilaterally changing their strategy, while others keep their strategy unchanged (see also NASH, 1951).
See KRASNER (1991), p. 338.
See KRASNER (1991), p. 338.
KRASNER’s (1991) main contention is that there are many points along the Pareto frontier and the question of how and which one will be chosen matters as much as the question of how to get to the Pareto frontier.
See KRASNER (1991), p. 340.
Wishlade rightly asserts that “the issue of competition for mobile investment has been the driving force behind the Commission policy in controlling general investment aid, and, in particular, regional aid” (RAINES/ BROWN, 1999, p. 94).
See RAINES/ BROWN (1999), p. 95.
See CALLEO (2001) for an interesting account of the diverging ideas about Europe’s future as well as their intellectual and spiritual progenitors.
RAINES/ BROWN (1999), p. 93.
According to GRUBB/ WELLS (1993), cited in RAINES/ BROWN (1999), p. 163, in 1993, the UK and Ireland displayed the most flexible overall labor environment, whereas Greece, Portugal and Italy had the least flexible labor market regulation.
See RAINES/ BROWN (1999), p. 162.
See our earlier discussion of MICHALET’s (1999, 1997) proposition that each country competes for FDI only with other locations at a similar level of development. CEE countries (except Slovenia) would find themselves not in the same league as the EU-15 countries but rather with countries such as Chile, Malaysia, Costa Rica, Brazil, Botswana, South Africa, the Dominican Republic and Peru.
See UNCTAD (2003), p. 64.
See PUTNAM (1988), p. 434. This constellation of international politics has subsequently been termed a “two-level game” (PUTNAM, 1988, p. 434).
See PUTNAM (1988), p. 442.
See Clement in RAINES/ BROWN (1999), pp. 147–148.
See PUTNAM (1988), p. 439.
PUTNAM terms this strategy of “creating a policy option [...] that was previously beyond domestic control” as “synergistic linkage” (PUTNAM, 1988, p. 447).
KRASNER (1991), p. 341.
KRASNER (1991), p. 343.
See KRASNER (1991), p. 342.
See YOUNG/ TAVARES (2004), p. 2.
For example, international business did not support the ITO Charter as it viewed the provisions for investments as insufficient (see SMYTHE, 1998, p. 89).
See SMYTHE (1998), p. 93.
SMYTHE (1998), p. 91.
See UNCTAD (2003), pp. 208–209.
See SMYTHE (1998), p. 94.
See SMYTHE (1998), p. 98.
The results on TRIMS at the Uruguay Round appear mixed. While TRIMS were identified as a violation of GATT article III (national treatment) and Article VI (quantitative restrictions), and member states were subsequently asked to notify and eliminate non-conforming measures within a certain period, the agreement itself posed few disciplining measures on its member countries and is seen as very limited in scope (see SMYTHE, 1998, p. 99).
Much has been written about the failure of the MAI and its subsequent lessons, both favorably and unfavorably to its cause (see for example CANNER, 1998; KOBRIN 1998; SMYTHE 1998; UNCTAD 1999; WALLACE-BRUCE 2001; SEID 2002; COULBY 2003; FERRARINI 2003; NUNNENKAMP 2003). Instead of providing a detailed textual analysis of the case, the focus here is on those converging “forces of a political, policy, social and economic nature” (UNCTAD, 1999, p. 30) that matter most from a regime-theoretic point of view. See also OECD (1995, 1996a, 1996b, 1996c, 1996d, 1997, 1997a) for details on the OECD position.
Interviews with MAI negotiators, cited in SMYTHE (1998), p. 100.
See CHARLTON (2003), p. 32.
See KRASNER (1991), p. 336.
See RUGGIERO (1998).
SMYTHE (1998), p. 110.
SEID (2000) identifies four distinct interest groups in his study: OECD countries, developing countries, public interest groups (business, environment, labor, consumer advocates) and intergovernmental organizations. The latter category as a distinct interest group for MAI purposes is questionable, not at least because the author also excludes this group from the above interest matrix (Table 16).
See SEID (2002), p. 199. According to the author, there was general agreement that free currency transfer should be permitted except in cases of balance-of-payment constraints. Similarly, there seems to be general consensus on the issue of expropriation, though different opinions exist on the exact definition of expropriation provisions.
See WOHLGEMUTH/ ADAMOVICH (1999), p. 3.
KASPER/ STREIT (1999), p. 402.
See WOHLGEMUTH (1995), p. 9.
WOHLGEMUTH (1995), p. 9.
The global business community was thought to be one of the most faithful supporters of the MAI proposal. However, in the end they appeared to have lost interest in the agreement which did not address the issue of taxation provisions, and seemed to provide only limited liberalization measures, while adding new environmental and labor regulations (see UNCTAD, 1999, p. 24).
The struggle over the venue of MAI negotiations itself presents an interesting case study on national interests as well as power capabilities of participating states involved in regime formation (see SMYTHE, 1998, for a detailed account).
See UNCTAD, 1999, pp. 24–25.
YOUNG/ TAVARES (2004), p. 2.
CHARLTON (2003), p. 29 cites the example of an agreement between the U.S. states of New York, New Jersey and Connecticut which aimed to put an end to incentive packages for companies to relocate to another state. The entire agreement lasted just four days when New Jersey broke it off by offering US$50 million to First Chicago Corporation, and New York had to counter their offer.
YOUNG (1989), p. 368.
Rights and permissions
Copyright information
© 2006 Deutscher Universitäts-Verlag | GWV Fachverlage GmbH, Wiesbaden
About this chapter
Cite this chapter
(2006). Institutional Choice and Cooperation in FDI Competition. In: Locational Tournaments in the Context of the EU Competitive Environment. DUV. https://doi.org/10.1007/978-3-8350-9109-2_15
Download citation
DOI: https://doi.org/10.1007/978-3-8350-9109-2_15
Publisher Name: DUV
Print ISBN: 978-3-8350-0280-7
Online ISBN: 978-3-8350-9109-2
eBook Packages: Business and EconomicsEconomics and Finance (R0)