Local Content Policies and their Implications for International Investment Law

The rise of local content requirements and policies (LCRs) in resource rich countries across the world, especially in Africa and the Middle East, presents a classic example of the complex tensions between economic rationality and political rationality in the domestic-level implementation of international investment law. While LCRs could provide a tool for governments to generate economic benefits for the local economy, LCRs may be incompatible with international trade and investment treaty obligations. This study develops a profile of the critical intersections and trade-offs between domestic level LCRs and international investment law. It demonstrates how inappropriately designed and implemented LCRs could result in a misalignment of a country’s fiscal policies and sustainable development goals, and may ultimately serve as disincentive to foreign investment. It then identifies innovative legal strategies to reform and address these misalignments and inconsistencies.