Economic Impacts of Investment Facilitation

After the successful adoption of the Trade Facilitation Agreement (TFA) in 2014, investment facilitation is gaining importance as the next policy priority for a plurilateral agreement under the World Trade Organization (WTO). In fact, more than 110 WTO Members aim to conclude the negotiations on the Investment Facilitation for Development (IFD) Agreement by mid-2023 after only three years of formal negotiations. Investment facilitation refers to actions taken by governments designed to attract foreign investment and maximize the effectiveness and efficiency of its administration through all stages of the investment cycle. The IFD agreement focuses on allowing investment to flow efficiently for the greatest benefit, particularly to developing and least developed member countries, with the aim of fostering sustainable development. The flow of efficiency is improved through transparency, predictability, and efficient frameworks with streamlined procedures. In addition, the agreement aims at improving intra-governmental coordination and international cooperation on investment matters. To provide policymakers with essential information for ongoing negotiations and to fill an existing research gap on investment facilitation, we examine the economic impacts of a potential IFD agreement. Generally, quantifying such impacts is predicated on an assessment of current frictions that limit investment on an international basis and the mechanism by which policy impacts these frictions.