International Investment And Role Of NAFTA: Critical Analysis
- IJLLR Journal
- Jul 31
- 1 min read
Pragya Srivastava, Assistant Professor, United University and Yashveer Singh, Assistant Professor, United University
ABSTRACT
This paper critically examines international investment, particularly the role of the North American Free Trade Agreement (NAFTA). International investment is crucial for global economic development, facilitating capital flows, enhancing productivity, and fostering economic cooperation among nations. NAFTA, established in 1994 between the United States, Canada, and Mexico, significantly impacted international investment patterns by establishing one of the world’s largest free trade zones. The agreement aimed to eliminate trade barriers, safeguard investors, and promote cross-border investments among member countries.
The study delves into how NAFTA contributed to increased Foreign Direct Investment (FDI) in the region. It provides legal certainty, investor protection clauses, and dispute resolution mechanisms, which attracted investment and boosted economic integration. However, NAFTA also faced criticism for favouring multinational corporations, leading to job displacements and creating socio-economic disparities.
Furthermore, the paper evaluates NAFTA’s investor-state dispute settlement (ISDS) provisions. While ISDS provided investor protection, it also posed challenges to national sovereignty. By comparing pre- and post-NAFTA investment trends, the research highlights the advantages and limitations of such trade agreements in regulating international investment.
In conclusion, the paper emphasises the need for balanced investment agreements that protect investors while ensuring equitable development, social justice, and environmental sustainability. The findings are contextualised in light of the transition from NAFTA to the United States- Mexico-Canada Agreement (USMCA).
