
Contents
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4.1 Introduction 4.1 Introduction
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4.2 Four Dominant Attitudes toward International Investment 4.2 Four Dominant Attitudes toward International Investment
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(a) Pro-international Investment Theories (a) Pro-international Investment Theories
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(b) Anti-international Investment Theories (b) Anti-international Investment Theories
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(c) Negotiation Theories of International Investment (c) Negotiation Theories of International Investment
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(d) Structural Theories of International Investment (d) Structural Theories of International Investment
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4.3 National Economic Systems and Development Models 4.3 National Economic Systems and Development Models
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(a) In General (a) In General
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(b) Models and Systems in the Developing World (b) Models and Systems in the Developing World
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(c) The Nature of Development Model I (c) The Nature of Development Model I
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(i) Public Ordering and State Planning (i) Public Ordering and State Planning
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(ii) Reliance on Public Sector Enterprises (ii) Reliance on Public Sector Enterprises
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(iii) Restriction and Regulation of the Private Sector (iii) Restriction and Regulation of the Private Sector
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(iv) Restrictions on Foreign Investment and Influence in the Economy (iv) Restrictions on Foreign Investment and Influence in the Economy
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(d) Implications of Development Model I for National Legal Systems (d) Implications of Development Model I for National Legal Systems
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(e) The Emergence of Development Model II (e) The Emergence of Development Model II
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(i) Reliance on Markets and Private Ordering (i) Reliance on Markets and Private Ordering
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(ii) Privatization (ii) Privatization
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(iii) Deregulation (iii) Deregulation
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(iv) Opening Economies (iv) Opening Economies
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(f) Implications of Development Model II for National Legal Systems (f) Implications of Development Model II for National Legal Systems
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(g) Conclusion: Future Models? (g) Conclusion: Future Models?
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4 Factors Shaping National Legal Frameworks for International Investment
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Published:February 2013
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Introduction
All national legal systems implicitly or explicitly address two fundamental issues with respect to international investment: (1) the extent to which foreign capital in its various forms is permitted to enter and exit national territory and (2) the treatment to be given to foreign capital once it enters national territory. Chapter 5 will address the first of these issues and Chapter 6 will address the second.
The content of national laws and regulations on these two issues is shaped by the interests, attitudes, and ideologies of countries’ governing authorities. At any particular time, governmental positions on questions relating to the entry, exit, and treatment of international investment are in turn influenced by domestic interest groups, such as labor unions and business associations, as well as by external forces such as diplomatic pressure from allies and from international institutions like the International Monetary Fund and the World Bank. Moreover, changes in countries’ governing regimes can lead to abrupt and far reaching alterations in their national frameworks for international investment. For example, the October Revolution of 1917 in Russia and the subsequent establishment of the Dictatorship of the Proletariat brought to power a governing regime that was hostile to foreign private capital. The new Soviet government confiscated foreign private property on a vast scale1 and refused to make restitution or pay compensation. It proceeded to create a national legal system that was extremely negative toward foreign private investment.2 On the other hand, when Anwar Sadat became President of Egypt in 1971 upon the death of Gamal Abdel Nasser, he reversed many of his predecessor’s policies opposing foreign investment and changed Egypt’s national legal framework by instituting a series of measures known as “economic openness” (infitah) that encouraged international investment.3
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