chapter  2
The control system pertinent to direct foreign investment
Pages 56

Investment is always accompanied by risks, both commercial and non-commercial. The transnational nature of international investment further increases the risks to which investors are exposed. Differences in culture and business environment; changes in the political, military, or economic situation of host countries; or even the occurrence of natural disasters may result in special risks for foreign investors. In order to strengthen investors’ confidence, the international community has established various control mechanisms. Some of these were set up unilaterally by home countries to encourage their domestic entities’ overseas investments; some were established through bilateral treaties between home and host countries; and yet others were established by multilateral agreements. No matter whether the mechanism is unilateral, bilateral, or multilateral, it is non-commercial risks that these control mechanisms aim at dealing with.