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CAFTA - Winners and Losers Analysis (April 2005)

Any Free Trade Agreement (FTA) results in winners and losers.   In contrast to popular notion, the line between the winners and losers does not converge with national borders.   Rather, the division is a sectarian one - winners and losers exist in all states that are members to the agreement.   This memo identifies the main winners and losers from the potential ratification of the Central American Free Trade Agreement (CAFTA) on both the American side and in the Central American Countries (CAC).   The memo uses the computational results of a simulation model conducted by the US International Trade Commission...

Foreign Investment in Post Conflict Environment (November 2004)

Social and economic well-being is an essential pillar in successful post-conflict reconstruction.  In this context, foreign direct investment is often reduced to a declaration that private-sector investment should be encouraged.  But not all forms of private investment are good in such an environment.  In many cases foreign investment becomes a new source of tension, grievance, discrimination, and instability. Structuring healthy foreign direct investment should be viewed as prevention of future conflict.

This paper presents recommendations for the conditions needed for attracting foreign investment, and sets-up guidelines for the contractual relationship between the business and the host government that are most beneficial for the economic and social well-being of the local population and its government.  Two forms of foreign investment will be discussed separately: natural resources and foreign investment in manufactured goods.   For each, the potential sources of tension, the needs of the investor and the ways to maximize social and economic well-being will be discussed...