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Global Corporations and National Governments By Edward M. Graham, Washington, DC, Institute for International Economics, 1996, pp.150, Paperback $20.00.
This is a slender volume with broad ambitions. In slightly over 100 pages, its aims are both to provide a broad survey of the data covering the postwar history, including major issues, relating to foreign direct investment (FDI) and to offer a persuasive argument for the need to establish a set of international rules governing the FDI behavior of national governments and multinational corporations. It is no small credit to the author that the book is largely successful in attaining both goals.
This is not the first time an international agreement on rules governing direct investment (active investment involving control over the firm's decisions) across national boundaries has been proposed. As originally contemplated, an International Trade Organization (ITO)would have completed the triumvirate of Bretton Woods institutions designed to facilitate the revival of international economic activity in the post-World War II era - the other two being the World Bank and the International Monetary Fund. Unlike the GATT, which developed into a partial substitute, the proposed ITO included provisions governing FDI as well as international trade. But its draft charter gave it much more authority to regulate the activities of international firms than to regulate government actions affecting those firms. Largely for that reason, the charter met with fatal resistance from the U.S. Congress, and the ITO died before it was born.
This cautionary bit of history notwithstanding, Graham offers a number of reasons why an international accord on FDI is...