The Conference was organized by the Vale Columbia Center on Sustainable International Investment; The Center on Global Legal Problems (Columbia Law School); NCCR/World Trade Institute Bern (University of Fribourg); Cadwalader Wickersham & Taft LLP; in cooperation with the Center for Transnationals’ Studies (Nankai University); and with the support of Mark and Gail Appel.
The process of global economic integration has accelerated during the past three decades, with world foreign direct investment (FDI) flows rising from $40-50 billion at the beginning of the 1980s to $1.8 trillion in 2007. Yet, in spite of the trend towards market liberalization and privatization during this period, the role of the state has arguably become more important in recent years. Indeed, many of the emerging market state-owned enterprises (SOEs) that survived the earlier waves of privatization are now flourishing, thanks in particular to booming global commodity prices and increased export earnings. Emerging market governments are also drawing on their accumulating exchange reserves to establish sovereign wealth funds for investment abroad. These two developments have contributed to a substantial increase of outward FDI from emerging markets, reaching $300 billion in 2007 (six times world FDI flows during the early 1980s). For example,Chinese state-controlled entities are estimated to account for about four-fifths of the country’s outward foreign direct investment.
In response to the rising importance of state-owned enterprises and sovereign wealth funds (SWFs)– collectively referred to here as “state-controlled entities” (SCEs) – policy-makers in a number of countries are re-thinking their own investment regulatory frameworks. The world has thus witnessed a resurgence of the role of the state vis-à-vis markets, with governments acting as both a source of – and potential impediment to – FDI.
The principal issues raised by this phenomenon were addressed systematically in a conference which took place October 1-2, 2008 at Columbia University – organized by the Vale Columbia Center on Sustainable International Investment, Columbia Law School’s Center on Global Legal Problems, Cadwalader, Wickersham & Taft LLP, the World Trade Institute, and the University of Fribourg (Switzerland), in cooperation with Nankai University (China), and with the support of Mark and Gail Appel. The Conference examined the role of state-controlled entities in the world FDI market, with a particular emphasis on the role of sovereign investment agencies (those parts of SWFs engaged in FDI), and explored the range of policy responses being considered to deal with this problématique.