International Journal of Law And Criminology
81
https://theusajournals.com/index.php/ijlc
VOLUME
Vol.05 Issue05 2025
PAGE NO.
81-85
10.37547/ijlc/Volume05Issue05-12
Towards A Sustainable Investment Framework: Legal
Tools for Effective Investment Facilitation
Kosimova Gulnoza Odilovna
Master’s student in International Law and Human Rights at Tashkent State University of Law, Uzbekistan
Received:
31 March 2025;
Accepted:
29 April 2025;
Published:
31 May 2025
Abstract:
This article explores the evolving concept of investment facilitation as a crucial legal and policy tool to
support sustainable development. While investment promotion traditionally focuses on marketing a location as
an attractive destination for foreign direct investment (FDI), investment facilitation seeks to reduce unnecessary
regulatory and administrative barriers to ensure smooth entry, operation, and retention of investment. The study
highlights how effective facilitation strategies must move beyond investor-centered approaches to align with
environmental, social, and developmental goals. It examines national, regional, and international governance
tools, with particular attention to Brazil’s innovative model of Cooperation and Facilitation Investment
Agreements (CFIAs), which emphasizes institutional support over investor
–
state dispute settlement. The article
also analyzes ongoing WTO negotiations on a multilateral framework for investment facilitation and the tensions
between soft law cooperation and binding obligations. By integrating legal, administrative, and policy
perspectives, the paper provides a structured roadmap for policymakers to develop investment facilitation
strategies that are transparent, inclusive, and tailored to advance sustainable development outcomes at all levels.
Keywords:
Investment Facilitation, Investment facilitation fo
r sustainable development, UNCTAD’s Perspective,
OECD Framework, Implementation Levels, Brazil’s model, WTO Structured Discussions
.
Introduction:
Overall, Investment promotion is about
promoting a country (or location within a country) as
an investment destination. Investment facilitation
focuses on minimizing unnecessary obstacles that
investors might encounter when setting up, growing, or
operating their businesses.
As this study suggests, Investment facilitation for
sustainable development refers to a set of instruments,
policies, and procedures designed to create a
regulatory and administrative environment that
supports investment aligned with, and not detrimental
to, sustainable development goals. The effective
implementation of each measure may vary depending
on the context
—
it can be most appropriately applied at
the national, regional, or global level, and may involve
actors such as the investor’s home country, the host
country, individual investors, bilateral or multilateral
partnerships, or international organizations. While
many regulatory aspects of investment facilitation for
sustainable development are most effectively
addressed at the national level, regional and
international collaboration can also play a crucial role
in tackling broader governance challenges.
Furthermore, addressing collective action challenges is
essential for advancing investment facilitation in
support
of
sustainable
development,
though
determining the most effective level of intervention
and appropriate tools remains complex and uncertain.
Policymakers should assess whether cooperative, non-
binding ('soft') approaches or binding, rules-based
('hard') measures are better suited to resolving these
issues.
This article provides Brazil's new model as an instance.
This model marks a change in approach to international
investment agreements, emphasizing enhanced
coordination and dialogue to better facilitate
investment between the treaty partners.
Also noteworthy is to mention that The WTO is
currently developing an agreement on investment
facilitation, but the final framework
—
including the
extent of any binding obligations
—
remains undecided.
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International Journal of Law And Criminology (ISSN: 2771-2214)
What are investment promotion and investment
facilitation?
Investment plays a vital role in advancing sustainable
development. When properly managed, foreign direct
investment (FDI) can drive economic growth, raise
living standards, generate employment, facilitate the
transfer of technology and expertise, and enhance
supply chains. However, these positive outcomes are
not guaranteed
—
if poorly regulated, investment can
lead to environmental damage, poor labor practices,
tax avoidance, and other negative consequences.
To maximize the benefits of FDI, countries rely on
investment promotion and facilitation. Though closely
related and often handled together, these two
concepts involve distinct functions. Investment
promotion focuses on marketing a country
—
or a
specific region within it
—
as an attractive destination
for investors. Investment facilitation, on the other
hand, involves removing or reducing unnecessary
barriers that investors may face when setting up,
expanding, or operating their businesses. These
barriers may include complex regulations, unclear
procedures, bureaucratic delays, difficulty accessing
investment information, corruption, or inadequate
infrastructure and services.
While investment promotion agencies in many
countries are responsible for both attracting and
supporting investors, effectively facilitating and
retaining investment requires coordinated efforts
across various areas of government and a
comprehensive legal and policy framework.
What does investment facilitation for sustainable
development mean?
Traditional views of investment facilitation
—
and even
many current discussions, including those claiming to
address sustainability
—
often prioritize the interests of
investors. These approaches typically emphasize
speeding up approval processes, eliminating regulatory
obstacles, and ensuring legal and policy stability.
However, as highlighted in the UNCTAD Global Action
Menu for Investment Facilitation (2016), investment
facilitation should not be viewed in isolation from the
broader development agenda. Truly effective
facilitation strategies must help attract and direct
investment toward sustainable development goals,
such as strengthening productive capacities and
building
essential
infrastructure.
Investment
facilitation should be fully integrated into the wider
investment policy framework, with the aim of
maximizing positive development outcomes while
reducing any potential negative impacts.
The
Organisation for Economic Co-operation and
Development (OECD)
, through its Policy Framework for
Investment, also approaches investment facilitation as
part of a broader policy strategy. According to Novik
and de Crombrugghe (2018), governments should aim
to create an investment-friendly environment that also
enhances the developmental benefits for society as a
whole.
Consequently, investment facilitation is no longer
viewed solely from an investor-focused perspective. It
now includes critical priorities such as environmental
sustainability, local economic and social development
(including support for women entrepreneurs),
industrial advancement, employment and workforce
training, protection of human rights, public health,
climate action, and alignment with national and
international development agendas.
In this light, investment facilitation for sustainable
development refers to a mix of instruments, policies,
and procedures that establish a regulatory and
administrative framework enabling investment that
promotes
—
and does not compromise
—
sustainable
development goals.
However, there remains a lack of robust empirical
evidence or global consensus on which specific tools
and measures are most appropriate for facilitating such
investment. Likewise, it is still uncertain at which
level
—
national, regional, or international
—
these tools
should be applied, and who should be responsible for
their implementation: the home country of the
investor, the host country, the investor themselves,
bilateral or multilateral groupings, or international
organizations (Novik and de Crombrugghe, 2018).
Governance and Tools at the National, Regional, and
International Levels
Deciding how a country will permit, regulate, and
manage investment involves complex considerations,
requiring a careful balance of costs and benefits across
various
policy
areas
—
such
as
environmental
protection, public health, labor standards, competition,
taxation, and sector-specific concerns. These can differ
widely depending on the industry (e.g., finance,
extractives, water and sanitation, healthcare,
manufacturing, telecommunications, agriculture) and
from one economy to another.
At the national level, issues such as how accessible and
transparent
investment
regulations
are,
how
administrative procedures are handled, and how
investments can be linked to the broader economy are
key. Many governments have also developed national
development plans that can be furthered through
effective investment facilitation, making national legal
and regulatory systems central to achieving sustainable
development goals (Brauch et al., 2019).
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International Journal of Law And Criminology (ISSN: 2771-2214)
Regionally, governments have worked together on
development goals that include investment facilitation.
Regional bodies such as the Southern African
Development Community (SADC) and the Common
Market for Eastern and Southern Africa (COMESA) have
developed model agreements and initiatives to guide
investment flows within their regions, serving as
important platforms to promote shared objectives and
sustainable investment.
Beyond the policies of capital-importing countries or
regions, home countries also play a significant role.
They may regulate or support outward investment
—
through tools like political risk insurance, investment
guarantees, or treaty protections. These practices vary
by country and form part of the broader discussion on
how and when capital should flow across borders.
Meanwhile,
international
standards
around
responsible business conduct and corporate human
rights obligations are evolving rapidly. These trends are
increasing expectations
—
and legal responsibilities
—
on
companies to adhere to ethical and sustainable
practices.
Consequently, there is also a growing need for
international cooperation to better coordinate
investment facilitation efforts, enable mutual learning,
and tackle shared challenges more effectively (Novik
and de Crombrugghe, 2018).
Using International Agreements to Advance and
Facilitate Sustainable Investment
In today’s interconnected world of global value chains
and mobile capital, countries often encounter
collective action challenges when it comes to
facilitating investment that supports sustainable
development. A key concern is the competition among
nations to attract foreign direct investment (FDI), which
can lead to a regulatory "race to the bottom"
—
weakening environmental, labor, and social standards.
In such cases, investment facilitation might involve
excessively simplifying or fast-tracking essential
requirements
—
like environmental, social, or human
rights impact assessments
—
in hopes of attracting FDI.
However, research suggests that maintaining these
standards leads to higher-quality and more sustainable
long-term investments (Coleman et al., 2018).
Developing
shared
norms
and
international
cooperation mechanisms could help reconcile the goals
of investment facilitation with the imperatives of
sustainable development. One major challenge lies in
addressing transnational governance gaps, especially
around the creation, enforcement, and oversight of
rules that govern corporate behavior. Complex
corporate structures can result in tax avoidance, social
and environmental harm, and difficulties for home and
host countries to monitor or regulate companies
effectively. International collaboration and improved
information-sharing
—
particularly
concerning
corporate ownership chains and investment flows
—
could enable more socially responsible regulation of
global investments.
Furthermore, existing platforms for exchanging
knowledge and best practices around sustainable
investment remain underdeveloped. Investment
promotion agencies and government bodies may
benefit significantly from insights into the successes
and setbacks of other countries. This could include
learning how to implement:
•
Tools such as one-stop shops, digital business
registration platforms, and investor aftercare services;
•
Policies focusing on transparency, anti-
corruption, and good governance;
•
Processes to make these tools and policies
effective, like stakeholder dialogues, interagency
coordination, and capacity-building initiatives (Novik
and de Crombrugghe, 2018; Brauch et al., 2019).
As regional and international cooperation on
investment facilitation grows, it will be essential for
governments to consider whether sustainable
development goals are best pursued through
collaborative, non-
binding (“soft”) approaches, or
through
formal,
commitment-
based
(“hard”)
mechanisms. Both strategies offer distinct benefits and
limitations, which will be further explored in
subsequent sections.
The Brazilian Model: Promoting Investment Through
Cooperation and Facilitation Agreements
In 2014, Brazil introduced a new approach to
international investment agreements that marked a
significant departure from traditional models centered
on investor protection and investor
–
state dispute
settlement (ISDS). Notably, Brazil has never been a
party to an investment treaty that includes ISDS
provisions. Instead, the country developed a model
that prioritizes cooperation and facilitation as tools for
attracting and retaining foreign investment (Brauch,
2020). This new approach led to the conclusion of
several Cooperation and Facilitation Investment
Agreements (CFIAs).
The Brazilian model was developed through extensive
consultations with both domestic stakeholders and
foreign investors to better understand how
international cooperation could support investment-
related goals. These discussions helped identify
practical steps to improve the investment climate,
emphasizing support mechanisms over legalistic
protections.
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Key features of Brazil’s CFIAs include:
•
The designation of contact points and the
establishment of national ombudsperson offices, which
serve as centralized platforms for addressing investor
concerns;
•
Implementation of procedures to streamline
visa issuance and other administrative requirements
essential for facilitating investment;
•
Although originally intended only for treaty
partners, Brazil has extended access to these
ombudsperson services to all foreign investors,
regardless of their country of origin.
The Brazilian model reflects a paradigm shift in how
investment treaties are conceptualized. Rather than
relying on adversarial dispute mechanisms, it
emphasizes preventing conflicts through dialogue,
coordination, and institutional support. If disputes do
arise and cannot be resolved through the facilitative
mechanisms provided in the agreement, the model
calls for state-to-state dispute settlement, avoiding
private investor claims against host states.
Although still relatively recent, Brazil’s approach offers
a compelling example of how investment agreements
can be designed to enhance investment governance,
promote
transparency,
and
align
investment
facilitation with development objectives
—
without
relying on traditional ISDS systems.
World Trade Organization: Structured Discussions on
Investment Facilitation
In December 2017, a group of 70 WTO Members issued
a Joint Ministerial Statement on Investment Facilitation
for Development, launching a process of structured
discussions aimed at establishing a multilateral
framework to facilitate investment. Importantly, the
scope of these discussions excludes issues such as
market access, investment protection, and investor
–
state dispute settlement (ISDS). As of now, 98 WTO
Members are participating in the initiative.
While the discussions have progressed, no final
consensus has yet been reached on what the future
framework should look like
—
particularly whether it
should contain binding rules or focus more on
voluntary cooperation and soft commitments.
Although the negotiation text is not publicly available,
internal draft versions have been significantly
developed and were expected to advance further or be
finalized during 2020 (Baliño et al., 2020).
The current draft reportedly contains a blend of binding
obligations and best-effort commitments, with special
provisions for capacity-building and differential
treatment for developing countries. Key issues
addressed in the negotiations include:
•
Non-discrimination and most-favoured-nation
(MFN) treatment;
•
Transparency and predictability in investment-
related measures;
•
Simplification of administrative procedures;
•
Creation of contact points for investors;
•
Regulatory coordination and coherence;
•
Corporate social responsibility (CSR); and
•
Anti-corruption measures (Baliño et al., 2020).
Despite the progress made, the inclusion of investment
facilitation within the WTO framework has faced
opposition. Some non-participating countries and
critical observers have raised concerns, arguing that
WTO
negotiations
often
result
in
binding
commitments, whereas investment facilitation may be
more
effective
through
flexible,
cooperative
approaches that emphasize capacity development.
Furthermore, critics question whether the WTO has the
appropriate
mandate
to
address
sustainable
development concerns in the context of investment
(Brauch, 2017; Mann and Brauch, 2018).
CONCLUSION
A Strategic Approach to Investment Facilitation for
Sustainable Development
Governments aiming to facilitate investment in ways
that support sustainable development must adopt a
structured and reflective approach, starting with key
guiding questions:
1.
Clarify Objectives:
What are the relevant national, regional, and
international sustainable development goals, including
sub-national priorities?
2.
Review Existing Frameworks:
What laws, policies, and agreements
—
at all levels
—
already govern these objectives?
3.
Define Desired Investment Outcomes:
What kind of investment flows and impacts are needed
to advance these development goals?
4.
Identify Gaps:
Are there regulatory or procedural barriers impeding
beneficial investment?
5.
Allocate Responsibilities:
Should these gaps be addressed nationally, regionally,
or internationally, and by which stakeholders?
6.
Select Effective Tools:
Which policies, processes, or mechanisms can best
remove those obstacles and promote desired
investment?
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7.
Determine Nature of Measures:
Are voluntary (soft) or binding (hard) approaches more
appropriate, and what are their relative advantages
and risks?
8.
Assess Capacity Needs:
What technical, financial, or institutional support
would governments require to implement the reforms?
9.
Evaluate Impacts:
What are the likely costs, benefits, and unintended
consequences
—
both
positive
and
negative
—
of
pursuing these reforms?
By working through these questions, policymakers can
design investment facilitation strategies that are
context-sensitive, goal-oriented, and aligned with
broader development agendas, ensuring that
investment truly serves the public good.
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and
Facilitation
for
Sustainable
Development’, July 2020, Columbia Center on
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-
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