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Where Are the BITs? How U.S. Bilateral Investment Treaties with Africa Can Promote Development

8/4/10
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This paper focuses on the role that bilateral investment treaties (BITs) can play in promoting development in sub-Saharan Africa. BITs defend and promote investment abroad by providing core protections to foreign investors, reducing investors’ exposure to political riskand uncertain business environments. But despite their potential benefits, BITs have been almost completely missing from U.S. engagement in sub-Saharan Africa over the last twenty years.

The U.S. government should launch a new four-pronged investment strategy for Africa. First, the government should pursue development-focused BITs with a handful of African countries that have a track record of implementing business-climate reforms. Second, it should negotiate BITs with two strategic countries with high political risk profiles, Nigeria and Angola. Third, the U.S. should launch a new Africa Doing Business Facility to identify reforming countries and implement robust technical assistance programs that reinforce and advance business-climate improvements. Lastly, it should forget about Trade and Investment Framework Agreements, which have almost no impact on international trade, investment flows, or U.S. businesses. Such a strategy will promote growth in Africa while also supporting U.S. commercial policy interests.

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