The Political Economy of International Investments

Content for campaigns/external publication investment thus has profound implications for public services, determining not only whether schools, hospitals, and water supply services get built, but also who gets schooled, who gets medical care, and who gets to enjoy piped water.

When money flows in and out of countries at the stroke of a computer keyboard, people who have never heard of bonds or derivatives, stocks, or shares investors are profoundly affected. The traders are probably unaware of the consequences of their actions on the lives and livelihoods of shanty-dwellers, aspirant middle-class householders, or workers on the other side of the globe, on environments destroyed, factories lost, savings wiped out or prospects shattered.

If the buying and selling of assets for profit are not to undermine the public good, the public must define that good. The public must frame the policies and laws that will hold investors to account when their actions undermine the public good. In sum, the struggle is to democratize investment.

Over the last two decades, however, many of the mechanisms developed to assert the public’s right to ensure that the wealth generated by citizens benefits the collective good have been dismantled. Under the direction of the International Monetary Fund, ’free market’ policies imposed across the globe have deregulated controls on investment and re-regulated markets (and subsidies) for the benefit of private, for-profit investors. In the process, decision-making has increasingly moved from public scrutiny and accountability.

To influence the investment process, the public needs to know how an investment works, who are the main players and what major trends. They explain the central role that transnational corporations have in investment. He sets out in clear and accessible language how investment patterns have changed in the past 20 or so years.

Avant grade writing guaranteed to debunk some of the myths surrounding investment flows. Foreign direct investment (FDI), for instance, is not an automatic route to economic growth. It can lead to an outflow of capital rather than an inflow.

In the Democratic Republic of Congo, Mali, and Nigeria, profit remittances going out of the country are higher than FDI inflows. The South has become a net exporter of capital to the North, particularly to the United States, a country that now relies on China and other developing countries to finance its huge deficits. The book outlines the growing backlash against foreign investments in many Latin American countries, Russia, Thailand, Korea, and India.

With clear examples and ample data, they map out investment flows, trends, and regulatory frameworks — and ways in which investors evade regulation. The rise of private equity funds is one example. They suggest ways in which the vast sums of money sloshing around the global financial system can be brought back under the democratic control of citizens and governments.

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