ABSTRACT
This article reviews the state of play regarding the investment regime in the World Trade Organization, with the objective of contributing to the debate on policy priorities for developing countries. It concludes that substantial progress on an investment regime at the multilateral level is unlikely and perhaps undesirable. A multilateral investment accord appears to be relatively unimportant to investors. Furthermore, institutional and regulatory harmonization derived from rules imposed by the World Trade Organization is costly and may be inappropriate for developing countries, as it may divert resources from higher priorities in development and act as a barrier to experimentation. Focus should be on the domestic policy agenda, including further external liberalization, and principally domestic regulatory and institutional reform. Improving these fundamentals should have a significant positive impact on the attraction of foreign direct investment. Host-country support for a multilateral trading system, nevertheless, continues to be of paramount importance, alongside a gradualist approach to a multilateral investment accord over the long term
