Legal Stability Contracts in Colombia: An Appropriate Incentive for Investments? Historical Causes and Impact Analysis of Law 963 of 2005

Publication Title

Richmond Journal of Global Law and Business

Document Type

Article

Publication Date

2013

Abstract

Current global economic order is openly dependent on foreign direct investment (FDI). At least since the 1990's, developing countries have competed to attract FDI because it is considered the best source of technology, employment, and financial resources. Colombian Law 963 of 2005, which is a response to said competition, allows the signature of Legal Stability Contracts (LSCs) between the State and investors for the purpose of stabilizing the rules guiding investment decisions, for up to 20 years. Legal stabilization has successfully proven to increase FDI inflows. Nevertheless, incentives for FDI have been subject to several critiques that stress the excess of benefits for foreign investors in exchange for weak commitments.

Wanting to examine the suitability of Law 963 in attracting FDI to Colombia and in increasing its positive impact, I studied the "state of art" of FDI and legal stabilization, the historical causes of incentives in Colombia, and the LSCs signed in the light of said Law. The results of my study reveal that the law successfully met the expectations of increasing investments. However, there is also evidence that early reforms and a deficient application of the law prevented it from increasing the positive social impact of investments.

Comments

External Links

HeinOnline

Lexis Advance

SSRN

Westlaw

Recommended Citation

Alvaro Pereira, Legal Stability Contracts in Colombia: An Appropriate Incentive for Investments? Historical Causes and Impact Analysis of Law 963 of 2005, 12 Rich. J. Global L. & Bus. 237 (2013).

Volume

12

Issue

2

First Page

237

Last Page

276

Link to Full Text

Share

COinS