Legal empowerment for local resource control

CHART 1. FOREIGN INVESTMENT IN SUB-SAHARAN AFRICA
US$ Billion
TABLE 2. FOREIGN INVESTMENT IN AFRICA, COMPARED TO LATIN
AMERICA AND EAST/SOUTH EAST ASIA (FDI FLOWS, MILLIONS OF DOLLARS)
1980-1985 1992-1997 2005 (3)
(annual average) (1) (annual average) (2)
Sub-Saharan Africa 897 4,010 17,934
Latin America and the Caribbean 6,035 38,167 103,663
South, East and South East Asia 4,644 69,609 165,093
Source: (1) UNCTAD, 1992; (2) UNCTAD, 2004; (3) UNCTAD, 2006.
Another socio-economic factor underpinning the focus on foreign investment
is the correlation between investment size and foreign participation, which
tends to exist in much of sub-Saharan Africa. Due to limits affecting the
internal capital market, local technological capacity, human capital and other
factors, complex, large-scale projects typically involve foreign investment.
This brings in economic clout, negotiating power and human skills that tend
to outweigh those enjoyed by domestic players.
The focus on foreign investment is also motivated on legal grounds.
Differently to domestic investment, foreign investment is regulated and
protected by international economic law, including a great and growing
% GDP
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