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NAFTA's Chapter 11 and the Environment: Addressing the Impacts of the Investor-State Process on the Environment

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NAFTA's Chapter 11 and the Environment: Addressing the Impacts of the Investor-State Process on the Environment

Investment by private sector companies into foreign countries, often referred to as foreign direct investment or FDI, emerged in the 1980s and 1990s as a major source of international development capital for developing countries. From 1988-1997, annual flows of FDI increased more than five-fold from OECD to non-OECD countries. Total foreign investment, including FDI and other market-based instruments such as bank lending and bond issues, now provides three times more investment capital than all forms of grants, Official Development Assistance and other non-market-based forms of support. Between one third and one half of all private investment in developing countries now comes from FDI. With vast amounts of capital needed to replace environmentally unsustainable industries and infrastructures with sustainable ones, it is clear that FDI is critical to achieving sustainability.

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