Ideas to Action:

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Investment

investment

The investment component of the CDI compares rich countries on policies that encourage constructive investment in poor countries. It is based on a checklist of policies that seem to matter. For example, do governments allow public pension funds to invest in poor countries? Do they offer insurance against political risks, such as expropriation, to encourage domestic companies to venture abroad? Do they first check for potential environmental and labor rights abuses in factories to be insured?


Europe's Investment Policies


Europe’s top performers on Investment

  Netherlands

Political risk insurance agency provides wide coverage and screens potential projects for violations of human, labour and environmental rights

  Germany

Employs tax treaties to prevent double taxation of corporate profits abroad

  United Kingdom

Active participation and leadership in extractive industries transparency initiative

  Norway

Displays leadership in encouraging poor countries to join the EITI and is one of the contributors to the World Bank Special Trust Fund to assist in its implementation

Europe’s lowest performers on Investment

  Slovakia

Loopholes in domestic legislation permit bribe payers to circumvent the OECD Convention

  Ireland

Does not provide political risk insurance through a national agency; and lacks policies to fully prevent double taxation of corporate profits earned abroad

  Hungary

Limited prosecution of home-country bribe payers

  Czech Republic

Political risk insurance agency does not screen projects for social impacts


The investment component focuses on two kinds of capital flows: foreign direct investment and portfolio investment. In addition, the CDI reflects a country’s participation in the Extractive Industries Transparency Initiative (EITI), the Kimberley Process on blood diamonds, and in the OECD anti-bribery convention.
Europe’s scores have risen gradually over time, and several countries perform quite well, but there is still room for improvement for several countries that fall towards the bottom of the group.

For more on investment, explore the private investment topic, related publications, and experts.

Read the Europe Beyond Aid Working Paper.

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