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CCSI | 3 February 2022
Primer on international investment treaties and investor-state dispute settlement
[Updated as of January 2022]
What is Foreign Direct Investment (FDI)?
FDI occurs when an individual or corporation in one country (“home state”) sets up or buys all or a significant part of a company that is incorporated in a different country (“host state”). Companies invest abroad to access land-based resources including mining, more affordable labour for instance in manufacturing, and new markets, among other reasons. Many countries seek to attract FDI in order to realize benefits in the form of tax revenues, technology transfer, jobs, and other economic linkages. The figure below illustrates the concept of FDI, as well as some of the sectors and industries into which it flows.