1. Foreign Direct Investment – Does the Rule of Law Matter?
Elias C. Chipimo
Annual LAZ Conference 2017

2. FDI – Does the Rule of Law Matter?
“It depends”
In some instances the answer may be “Yes”
In certain instances the answer may be “No”
The key to determining the answer will always lie in the vision and objectives to which a nation has aligned itself

3. Introduction – Rule of Law
Is there an objective definition of “Rule of Law”?
Different things to different people
Prisoner (access to justice)
Investor (effective enforcement of rights)
Regular citizen (lack of accountability)
“Why should any society seek to establish the rule of law and how does this impact foreign direct investment”?

4. Rudiments of the Rule of Law

5. Rudiments of the Rule of Law
Balancing power in society – no one is above reproach and ordinary citizens have a right to air and have their grievances addressed
A set of principles that provides objective standards for applying laws so that: (1) no one is disadvantaged by being denied access to a known and documented set of laws and (2) no one can circumvent laws due to wealth or position in society

6. Rudiments of the Rule of Law
Combination of three critical elements:
Legal and regulatory regime
Institutional framework
Cultural context
World Justice Project
Established in 2006
Created under the American Bar Association
Established 4 principles that underpin the rule of law

7. 4 Universal Principles (WJP)
1. The government and its officials and agents as well as individuals and private entities are accountable under the law.
2. The laws are clear, publicised, stable, and just; are applied evenly; and protect fundamental rights, including the security of persons and property and certain core human rights.

8. 4 Universal Principles (WJP)
3. The process by which the laws are enacted, administered, and enforced is accessible, fair, and efficient.
4. Justice is delivered timely by competent, ethical, and independent representatives and neutrals who are of sufficient number, have adequate resources, and reflect the makeup of the communities they serve.

9. FDI – Lessons Learned
Recognition that legal and institutional reform does not happen overnight
Extensive overhaul of a country’s legal and institutional system is not a necessary precondition to attract large multinational investment
Foreign investment is a dynamic force in the forefront of the push for reform

10. FDI – Lessons Learned
Often the requirement of foreign investors is not grand sweeping changes but mundane specific ones
Because of their practical approach and specific demands, foreign investors are well suited to articulate rule of law challenges
FDI can facilitate effective legal and institutional change

11. FDI – Does Rule of Law Matter?
Yes No
Inclusive development
Patronage (who you know)
Broad-based FDI
Specific
Economic diversification
Narrow mono- economic base
Large, small and micro-scale investment
One-off big investment intention

12. Thank You
Questions