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36 mestic market and thereby would be able to give impulses to promote development. Especially during the last years, and particularly under the pressure of the requirements that IMF has placed on debtor countries, the highly indebted Latin American countries have seen themselves in the macroeconomic obligation to realize exportsurpluses, so that inflowing foreign currency has to be largely targeted towards exports. With regards to Brazil or Argentina, for example, the following macroeconomic image can be drawn: Foreign direct investment increasingly brought foreign currency into the country during the nineties, but this direct investment will, on the one hand, lead to faster outflow of profits: Even though a direct investment in the short term has a positive influence on the balance of payments, in the long run it has the disadvantage of creating capital outflows. On the other hand, this direct investment will not create further foreign currency inflows, as it is predominantly focused on the domestic market – which for both countries is especially problematic considering their high foreign debt and in this respect cannot contribute to macroeconomic stabilization against potential financial crises. Additionally, even though the by far largest part of this direct investment is directed towards the domestic market, it is particularly concentrated in the area of services like telecommunications and banking: How can such direct investment, which is targeted at the domestic market, then have the ability to promote regional development? Argentina and Brazil are confronted with the dilemma of having to attract direct investment in order to pay off their debts and to maintain good balance of payments– and on the other hand, trying to use this foreign capital in a way which is productive for regional development, i.e., directed towards the domestic market. Whether the telecommunications and banking sectors can be regarded as especially productive in this sense, can be seriously doubted. Furthermore, it is not quite understandable why one should expect a drive for (sustainable) development from investors, who function according to the market laws of profit and performance, cost reduction and ousting of the competition. Since it is not expected from the market participants that the investments undertaken be directly utilized for socially and environmentally friendly development, the indirect connections of the neoliberal development theories are used to support the argumentation that: According to this development-model the decisive agent is not the state, but the free forces of the deregulated market which will with the “invisible hand” bring about the promotion of development. Worldwide countries adhere to this strong belief in the market, that foreign investment will lead to development: there is increasing competition between states for foreign investment, which is expressed in national, regional and local programs for the promotion of FDI, i.e., in preferential tax treatment for private foreign investors. It should be mentioned here that – even thinking in terms of market-rules-
• according to a study conducted by the consulting firm McKinsey 69 governmental investment incentives are “harmful”: The study reaches the conclusion, that governmental investment incentives lead to a decrease in productivity, to no creation of new jobs, as well as to a reduction in the amount of foreign investment, which would have been made anyway in the absence of incentives. 70 • according to a study of the Ifo-Institute, which investigated the case of the Federal Republic of Germany, 90 percent of foreign investment was made to assure sales abroad and thereby primarily served the investment-exporting country 71 in order to maintain employment “at home”, as in the case of Germany, where 1/3 of employment depends on exports and where the connection between foreign investment and internal economic power has to be regarded in a different light. • Once again the question arrises whether FDI is conducive to sustainable development in the proposed manner (or if it does so at all). Mexico, for example, with its 11 free trade-agreements 72 and being one of the most-hailed countries of the neoliberal mainstream, has had a different experience: Even if, according to a study of the Washington-based Carnegie Endowment for International Peace, between 1994 and 2002 around 500,000 jobs were created in the industrial sector, at the same time, according to the study, 1.3 million jobs were lost in the agricultural sector, where 20% of the Mexican population is employed. Wheat imports from the U.S. rose by 180 percent and corn imports from the U.S. increased sixfold. 73 Under NAFTA exports indeed increased threefold in three years, yet at the same time the foreign trade deficit also increased because a large portion of capital goods continues to be imported. The maquila-industry, the perfect example for sup- 69 This refers to the McKinsey study which investigated the impact of governmental investment incentive programs in the automobile sector, beginning in 1995, in Mexico, Brasil, China and India. See: http://www.bbc.co.uk/ portuguese/economia/story/2003/10/031016_mckinseymla.shtml. 70 See: http://www.bbc.co.uk/portuguese/economia/story/2003/10/031016_mckinseymla.shtml. 71 “Nach einer Umfrage des Ifo-Instituts (ifo-Informationsdienst 16/96) stehen nämlich auch die Direktinvestitionen im Ausland im Dienste des Exports. Über 90% der Auslandsstandorte sollen Vertrieb und Service, also den Export, fördern. [...] Generell erfolgen die deutschen Direktinvestitionen im Ausland zum Zweck der Absatzsicherung und sichern somit die Beschäftigung im Inland.” Handelsblatt: Die Logik der Zahlungsbilanz, Hans Mundorf, March 13, 1997, p. 6. Own translation: “According to a survey of the Ifo-Institute (ifo-Informationsdienst 16/96) direct investment made abroad mainly serves exports. More than 90% of foreign locations are meant to promote sales and service, i.e., exports. [...]. Generally the German foreign investment abroad serves the objective of assuring sales and therby also securing German employment.” 72 Gerold Schmidt: México, campeón mundial de los tratados de libre comercio con contradicciones internas, La apertura total hacia los EUA y el mercado mundial de poco le sirve a las mayorías, http://www.cancun2003.org/ es/web/101.html. 73 http://www.bbc.co.uk/portuguese/economia/story/2003/11/031119_naftamla.shtml, siehe auch: Folha se São Paulo: Nem sol, nem lua, December 2, 2003. 37
Page 2 and 3: Christian Russau Enforcement of int
Page 4 and 5: Preface Since the end of 1999 the C
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Page 8 and 9: 8 Chapter 5: The enforcement of int
Page 10 and 11: 10 1.1 Negotiations of the “Inter
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134 DIHK Deutscher Industrie- und H
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