Food Security, Foreign Direct Investment and Multilevel Governance in Weak States

Abstract:     
Attracting agro-investment is important in food deficit countries that experience low relative yields for their agricultural production. Foreign direct investment (FDI) can play a crucial role because it means that the right quantities reach food deficit areas at the right moment. However, FDI is not always the answer to food security problems. In reality it can be very much a two-edge sword, especially for weak states. This paper will argue that agro-FDI is governed by overlapping international and regional treaty obligations that interact with the terms of the various bilateral investment treaties (BITs) and the national law of the host state (the state in which the investment occurs). This creates a multilevel system of governance for FDI in agriculture that creates obligations and responsibilities for the host state, the investor and the investor’s home state (the state in which the investor is incorporated).

We will argue that this system of obligations and responsibilities is unevenly distributed, in such a way that it impacts adversely on the host state’s food security. We will show that this uneven distribution can be attributed to the lack of legally enforceable ‘hard rules’ in the international and regional treaties that could potentially protect the host state’s food security, and a plethora of hard rules that protect the investor. We will argue that this over protection and under regulation of agriculture FDI is particularly problematic in weak states. We propose a public interest clause for the BIT to mitigate these problems.

Number of Pages in PDF File: 29

Keywords: investment, FDI, land grab, soft law, human rights, BITs

JEL Classification: F02, F10, F20, F30, F40

working papers series