Local Content Policies and Their Implications for International Investment Law

The rise of local content requirements (LCRs) in resource-rich countries across the world presents new and contemporary challenges to international investment law. While LCRs generally aim to boost domestic value creation and long-term economic growth, inappropriately designed LCRs could result in a misalignment of a country’s fiscal policies and international investment law and may ultimately serve as disincentive to foreign investment. This chapter develops a profile of the critical intersections and tensions between domestic-level LCRs and international investment law. It identifies innovative legal strategies to reform and address these misalignments and inconsistencies. A clear, comprehensive, and transparent set of horizontal and collaborative policies targeted at creating a supportive regulatory and business-friendly economic environment for investors to deliver greater value in the host country can advance both immediate and longer-term local content objectives with fewer potential investment distortions.