Capitalism, International Investment Law and the Development Conundrum

International investments in developing countries are fraught with varied influences, competing interests and contestations about their contribution to development. This article examines the main vehicle of foreign investment – international investment law (IIAs) – to ascertain its role as a development tool particularly for developing African states. It uses theories and legal analysis of capitalism and development, to argue that IIAs represent forms of capital, capitalisation and growth processes as development – “capitalist growth development investment” (DFDI). It argues that FDI literature erroneously propagate the construction and framing of investment capital and promote the intangible assets of transnational corporations as the most important factor in FDI’s growth propensity for developing host states. It shows how this flaw roots IIAs, especially BITs in capitalism, capitalisation of assets and entitlement rights as the factors of growth needing substantive protection, but neglects the relational effect of growth development as a contribution of foreign investments to the developing host states. This contrasts with the broader development orientation of African economic cooperation and preferential trade and investment agreements, creating thereby the potential for conflicts between various investment regimes on the concept of development. The article calls for a new rationality in defining investment capital, which encourages the application of the economic concept of “asset” or “capital” to LDCs natural resources that may form the subject of investments. This will facilitate their “transnationalisation” and “capitalisation” and invariably enhance and protect their growth potential, including through IIAs. It also entails suggestions on how developing host states can protect the broader development contribution of IIAs.