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Multinational Agreement on Investment

THE MULTILATERAL AGREEMENT ON INVESTMENT AMONG ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT MEMBER STATES: THE NEED, BARRIERS, STRUCTURE, IMPLICATIONS, AND PROSPECTS

Organization For Economic Cooperation and Development (OECD) member states are negotiating a Multilateral Agreement on Investment (MAI) with a tentative target date of May 1998 for completion of the negotiations ("A multilateral," 1996). The proposed MAI will be open to all OECD member states and will be open to accession by non-member states. The proposed MAI, if ratified and implemented, will be the first multilateral treaty providing what its proponents refer to as high standards for the liberalization and protection of international investment, and for effectively settling disputes associated with such investment.

The proposed OECD-based MAI is assessed in this study. The findings of the research performed are presented in discussions dealing with (1) the need for an OECD-based MAI, (2) barriers to negotiating an OECD-based MAI, (3) the structure required for an effective OECD-based MAI, (4) the implications of the implementation of an OECD-based MAI, and (5) the prospects for the ratification of an OECD-based MAI.

The Need for A Multilateral Agreement on Investment

A widely accepted premise is that firms expand to foreign markets in order to exploit the monopoly they possess over rent-yielding advantages such as economies of scale, and superior product and process technologies (Balasubramanyam & Greenaway, 1992). The internalization explanation of FDI, an extension to the monopoly exploiting premise, argues that, in the presence of various of market imperfections, it is advantageous for firms to internalize rather than engage in arm's-length transactions. Dunning (1989) identified three conditions as being essential for FDI to occur. First, firms should possess ownership advantages of the type identified in the monopoly exploiting premise....

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Multinational Agreement on Investment. (1969, December 31). In LotsofEssays.com. Retrieved 20:26, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1694499.html