ABSTRACT
This chapter discusses definitions of international investment, its effects on economies, as well as states' policy instruments to deal with the phenomenon. It traces the legal and economic history of the international investment regime. In economics, Foreign Direct Investment (FDI) designates the international investment and production activities of multinational enterprises (MNEs). FDI and MNE activities have manifold positive as well as negative economic and political effects on countries. The chapter presents the main investment policy tools, which European governments have been using in order to influence FDI flows and MNE activities: investment guarantees, political and technical support for national investors, investment review mechanisms and international investment agreements. Post-establishment treatment and protection standards are the cornerstone of the global investment regime. Investment arbitration normally assesses the legality of state measures and actions and may have significant financial implications for taxpayers. International investment was primarily strategic asset- or resource-seeking and unlike the bulk of modern international investment.
