Foreign Direct Investment (FDI) is a category of investment that reflects the objective of establishing a lasting interest by a resident enterprise in one economy in an enterprise that is resident in an economy other than that of the direct investor. The lasting interest implies the existence of a long-term relationship between the direct investor and the direct investment enterprise and a significant degree of influence on the management of the enterprise. Basic forms of FDI are investment made to develop a production or manufacturing plant from the ground up (“greenfield investments”), mergers and acquisitions, and joint ventures. Three components of FDI are usually identified: equity capital, reinvested earnings, and intracompany loans.

FDI is considered to be both an important indicator and a driving force of what is called economic globalization. The growth of FDI has been facilitated by various political actors, including national governments and international organizations. FDI inflow is considered as a crucial presupposition of economic development. FDI has potentially both positive and negative effects on host economies. These effects depend on a number of factors, including a host economy’s level of development, the type of investment, and the position of the particular investment site in the investor’s business strategy.

The International Centre for Settlement of Investment Disputes (ICSID) is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes. The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the International Bank for Reconstruction and Development (the World Bank). It was opened for signature on March 18, 1965 and entered into force on October 14, 1966.

Although ICSID is considered to be the leading international arbitration institution devoted to investor-State arbitration, the Transatlantic Trade and Investment Partnership (TTIP) agreement between the European Union and the United States included an investor-state dispute settlement (ISDS) mechanism, whereby individual foreign investors may bring claims against host state governments for breach of the TTIP’s investment protection standards. This ISDS system is comparable to what has been included in agreements such as the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, the North American Free Trade Agreement (NAFTA 'Chapter 11'), and the Central American Free Trade Agreement (CAFTA-DR).

This Research Guide is intended as a starting point for research on Foreign Direct Investment. It provides the basic legal materials available in the Peace Palace Library, both in print and electronic format. Handbooks, leading articles, bibliographies, periodicals, serial publications and documents of interest are presented in the Selective Bibliography section. Links to the PPL Catalogue are inserted. The Library's subject heading (keyword) Foreign Direct Investment is instrumental for searching through the Catalogue. Special attention is given to our subscriptions on databases, e-journals, e-books and other electronic resources. Finally, this Research Guide features links to relevant websites and other online resources of particular interest.


Sources of international law



Reference works

Selected books and articles

For all peer-reviewed articles in the PPL Catalogue, click here.

Periodicals, serial publications