Foreign Direct Investment (FDI) in Land in developing countries

54distribution of land and on eventual permittingland concessions.Ex post elements address mechanism to solveproblems that appear after FDI are implemented.• Compensation for expropriation can addresseither local farmers and depend then on respectivedomestic legal provisions in the targetcountry or foreign investors and will then bepart of a BIT.• Macroeconomic protection clauses can addresschanges in the macroeconomic situation in thetarget country. Trade restrictions can then beallowed which may affect the investing countrynegatively but support the target country’seconomy. They should be restricted to a limitedperiod of time and are usually part of a BIT.• Food security protection clauses. Domesticfood security should have priority over thesupply of export markets. If national foodsecurity is at risk (for instance, in case of anacute drought), export restrictions can supportdomestic food availability for the target country.As they may be counterproductive in the longrun, they have to be limited in time. They areallowed according to the WTO and could becovered as well by BITs. Additionally, suchprovisions can be part of the private contract.More general provisions refer to the internationalcommunity:• Development of international guidelines forinvestments in land and natural resourcesabroad. The institutional arrangements could bemodelled after the international business lawsadopted during the past 10 years to preventcorrupt practices in the context of FDI. Thefollowing policies and guidelines could berelevant in this context: FAO Voluntary Guidelinesfor the Right to Food, EU Land PolicyGuidelines, FAO Voluntary Guidelines forResponsible Governance of Tenure of Land andother Natural Resources and the African LandPolicy Initiative.• Enforcement of scientific research. Focusshould be on food security issues and theeconomic, social and ecological impacts ofFDI in land in the target countries.All recommendations are in line with those ofother organisations dealing with problems causedby FDI in land. The case studies reveal thenecessity of acting according to these recommendations,but they give evidence of some obstaclesin implementing them. Transparency is difficultto achieve as long as a lack of transparency is inthe interest of powerful groups in the society.The GTZ project in Lao PDR reveals that it takesextensive field research to generate reliable informationabout the extent of FDI in land and thatit requires the willingness by national and localauthorities to co-operate. Moreover, it takes yearsto implement a system of land registration and toregister land titles. So regarding the conditions indeveloping countries, it may be difficult to enforcethe rights of poor people and to implement aninstitutional framework that takes into accounttheir needs.Moreover, recommendations given by severalinstitutions suggest that there is a common sensein the target countries regarding strategies ofdevelopment and the distribution of benefits. Theydo not deal with the difficulties of different groupsseeking rent within the target country. So theoverall problem cannot be reduced to an imbalanceof power between the foreign direct investoron the one side and the target country on theother. A comprehensive approach must considerthe political and societal environment within thetarget country in order to develop a strategy thatis in line with internationally agreed developmentobjectives.Another opportunity is to address the investorsexplicitly. Regarding investments done by governmentsor governmental organisations like SovereignWealth Funds and state-owned enterprises, acode of conduct could be established and enforcedby political agreements. Regarding private enterprises,the code of conduct could be integratedinto guidelines for corporate social responsibility.Given the fact that corporate social responsibilityis becoming more and more important for at leastsome of the global players on the food and agrofuelsmarkets, this may be an opportunity toachieve some improvements.