Foreign investment can play a critical role in improving the economic conditions in developing countries.
As a result, many African countries are keen to have foreign based companies invest and set up shop within their borders.
Foreign investment is hardly free, in most cases foreign companies benefit in some or other way from operating in a foreign jurisdiction.
They may benefit from a number of advantages including the natural resources such country has to offer, corporate tax rates, and from lax environmental laws.
Where environmental laws are concerned, it may be that in the company’s country of origin there are certain activities of the company which are prohibited, and as a solution, the activity in question is moved to a different jurisdiction.
It is therefore important to scrutinise the intentions of foreign investors. It is not uncommon to hear reports of companies setting up shop in a developing country only to make a handsome profit and leaving behind an environmental disaster. An OECD report states that competition for foreign direct investment depresses environmental standards, creating what can be termed as pollution havens.
It therefore behoves governments in developing countries to eliminate the trend by adhering to treaties, conventions and other multilateral agreements which provide for acceptable environmental standards to inform policies and laws. Furthermore, there is a duty on all countries to meet their environmental obligations. This does not mean that pollution and other environmentally harmful practices must merely be outsourced. The objective is to get the whole of the global community acting in concert to prevent further harm to the environment.
Development is important, however it is not a goal that must be sought at all costs.
All governments must recognise that the environment is not for sale, all ostensible investment with unfavourable environmental effects is no investment at all.
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