Foreign Direct Investment (FDI) in Land in developing countries

55The second element of a dual approach recommendedby v. Braun and Meinzen-Dick (IFPRI,2009) consists of facilitating opportunities in thetarget countries by strengthening the policyenvironment and implementation capabilities.These target countries should improve investmentclimate through the rule of law and contractsecurity; pursue evidence-based agriculturalpolicies related to incentives, markets, technologies,and rural infrastructure; facilitate out-growerschemes and contract farming in the smallholdersector; enhance market information systems thatcan point to opportunities for farming communities;and build extension systems that facilitateaccess to knowledge and services, including ruralbanking.To sum up: According to the results of the casestudies, the problems arising with FDI in land arenot so much a deficit in the legal environment ofthe target countries. There seem to be deficits inenforcing the laws and in (the willingness in)controlling that give room for assigning landconcessions not in line with the interests of thepoor. A lack of a comprehensive cadastral systemand the deficit of land titles aggravate transparencyand controlling.Another approach to deal with the problemsarising from FDI in land is to strengthen thecompetitiveness of contract farming. UNCTADconcludes in the World Investment Report 2009:”With regard to the mode of TNC involvement,evidence from many developing countries showsthat through contract farming target countries canreceive most of the benefits related to TNCparticipation, while avoiding a number of negativeconsequences.” But contract farming in the frameof Transnational Corporations requires appropriatecapabilities of the farmers and appropriatetechnology and expertise to deliver quality andquantity of the products. A suitable organisationof local farmers may help to fulfil these requirements.In light of this, educating local farmers accordingto the requirements of contract farming andassistance in organising contract farming in globalvalue chains can be a means to strengthen thecompetitiveness of relevant alternatives to FDI interms of TNC participation.Referring to the Roundtable “Promoting ResponsibleInternational Investment in Agriculture”mentioned in the introduction, a first step towardsa coordinated international response to theacquisition of rights to land and related resourceshas been done (compare Government of Japan,World Bank, FAO, IFAD, UNCTAD 2009).At the roundtable it was generally agreed thatinvestments in agriculture are vital for improvingfood security and economic growth. On the otherhand many participants expressed an urgent needfor action to alleviate possible negative impactsassociated with large-scale international investmentsin developing countries.Some analyses propose elements of a “code ofconduct”, general guidelines and measures toovercome probable negative impacts. Importantrecommendations are outlined hereafter (comparee.g. v. Braun and Meinzen-Dick, (IFPRI), 2009;Cotula et al, (IIED, FAO, IFAD), 2009;Bickel and Breuer, 2009; Smaller and Mann ,(IISD), 2009 De Schutter, 2009).A code of conduct as a first element in a dualapproach for foreign land acquisition requiresinternational arrangements and laws that applyeverywhere, not only in the countries that aretargets of investments, which often have insufficientlydeveloped legal institutions and enforcementmechanisms, but also in the countrieswhere the investments originate.