Exploring the impact of new generation model BITs on technology transfer and sustainable development

Abstract

In the context of globalization, foreign direct investments (FDIs) play a pivotal role in the economic development strategies of nations. The widespread expansion of multinational corporations has led to the rise of foreign-owned or dominated trading companies, often placing FDI in a secondary position compared to portfolio investments. However, beyond providing capital, these investments frequently bring technological advancements, managerial expertise, innovation, and access to global markets, fostering more sustainable and comprehensive growth for the host country. The appeal of a nation to foreign investors is shaped by three key factors. First, the overall economic conditions are crucial - countries experiencing strong economic growth naturally become more attractive to investors. Second, the political environment is equally important, as stability encourages foreign investors to commit. Lastly, legal certainty, which is closely tied to the country’s legal framework and policies, is vital for ensuring investor confidence and predictability. In this context, FDIs play a critical role in driving economic development by introducing fresh capital, technology, andexpertise that generate a wide range of benefits for the host economy, from infrastructure development to job creation. Technology transfer, in this context, refers to the movement of scientific production or distribution methods between enterprises, institutions, or nations facilitated through foreign investment, international trade, patent licensing, technical assistance, or training. This paper will explore the potential of technology transfer within the framework of new-generation Bilateral Investment Treaties (BITs) and their broader implications for achieving sustainable development in a rapidly evolving global economy. New Model BITs are designed to facilitate FDI from capital-rich and highly skilled economies, predominantly members of the OECD, into less developed nations. These agreements aim to provide legal protection and stability for foreign investors, thereby reducing risks associated with investing in emerging markets. As a result, BITs promote the flow of capital, technology and expertise from developed countries to support the economic growth of the recipient nations.