Leveraging Investment for Sustainable Development: the Role of Performance Requirements for Technology Transfer

Governments can impose performance requirements on multinational enterprises (MNEs) in extractive and other industries as a mandatory condition for establishing an investment, or can impose the requirements as a condition for the MNEs’ receipt of an advantage such as a tax break; and they do so in order to further a variety of development objectives. Although performance requirements have shown to be important tools for countries to advance their sustainable development goals, not all such measures are equally successful. It is therefore essential for governments to have a solid understanding of the types of performance requirements available to them, the proper circumstances under which to apply the measures, and the options for tailoring the measures to maximize their contributions to sustainable development.

A quality toolbox of performance requirements for governments can have transformative impacts on developing countries, enabling them to leverage their competitive advantages for dynamic and long-term growth supported by a diversified economy. At present, however, information regarding the tools that can and should go in that policy toolbox to facilitate transfer of technology through investment in different sectors is scattered and difficult to access.

This project seeks to address that issue by furthering research (1) on the types of performance requirements countries may want to use (or avoid using) in order to fully reap the benefits from investments by MNEs; and (2) the role of international investment agreements in promoting or restricting use of such performance requirements.