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Introduction

Australia and Venezuela are both resource rich ex-colonies with distinctive positions on foreign direct investment (FDI). Australia is a developed, pro-globalisation nation embracing economic liberalism. Australia endeavours to attract productive FDI to support sustainable industry growth and development. That is, FDI that creates or safeguards jobs and access to overseas markets, introduces new technologies or management skills to Australia, and produces goods or services for export or the Australian market. By contrast, Venezuela's foreign investment policy, though seemingly open, is underpinned by a general dislike for transnational corporations (TNC's) and is subject to sporadic adjustments. In the last two decades Venezuela has attempted to revitalise their volatile economy by liberalising FDI policy. Reforms in the 1990's placed Venezuela among the most promising of emerging markets. However political upheavals between socialists and economic liberals, coups, strikes, alleged corruption, and a track record of unpredicted policy changes have dampened investor optimism. These setbacks, coupled with a high degree of government intervention and expropriation by the current Ch�vez Administration, have held the economy down. This essay will discuss and compare Australian and Venezuelan foreign investment policies as embodied in law, exploring these policies practical function in each nation as well as their evolution over the last two decades. FDI in Australia dates back to the country's time as a Dominion and later Realm of the British Crown to its position as a strong ally of the United States in the Cold War to its engagement with Asia as a power in its own right. (Islam & Hossain, 2006). Australia's current FDI policy, as expounded in the Foreign Acquisitions and Takeovers Act 1975 (FATA), conveys a strong welcome to foreign investors, provided their activities align with national interest (Comlaw, 2005). The investment credit to the capital account funds Australia's growth and has helped pay off external debt (FDI, 2007). In the past two decades The Australian government has taken numerous steps to improve the business environment for foreign investors, recognising the contribution FDI makes to the development of Australian industry, economic growth and employment. ...read more.

Middle

We have not fallen into the tech-wreck trap, putting all our eggs into the high-tech market". In contrast, Venezuela has most of her eggs in the oil basket and is vulnerable to the rises and falls of global oil prices. During booms Ch�vez funnels much of the profit into immediate needs of healthcare, housing, and education for the poor. At the same time, far too little investment is put into long-term economic growth, leaving the economy stifled despite the country's enormous potential. An example of one such regime is price controls on the food and agriculture sector since 2003 in order to feed the poor. Some prices are set so low that companies are obliged to sell at a loss. If they don't, they risk fines, temporary closure, expropriation or even imprisonment. In March 2007 the government temporarily closed 17 butchers' shops it accused of breaking price regulations. Australia, with its transparent, simple bureaucratic procedures and strong economy is an easier nation to penetrate. Venezuelan administration and legal barriers are more complex as a result of inconsistent politics, adjustments to the constitution, the increasing the powers of the presidency, additions and rewrites of laws, risk of corruption and unpredictability. The Australian FIRB acts as an easy one-stop-shop for potential investors. Venezuela offers no such service. This lack of facilitation deters investors even more than Venezuelan hostility. Australia maintains a thorough anti-corruption policy and supports the OECD anti-bribery convention 1996. Venezuela has a significant problem in this area despite their own anti-corruption regulations. In January 2007 a National Assembly investigation began into 700 cases of alleged corruption and embezzlement, including accusations against the bank-deposit protection fund and a state agricultural development fund. Unsolicited expropriation of oil fields from TNC's via armed military have been common in Venezuela. In Australia expropriation is in accordance with international law and appropriate compensation is paid. The countries do share some similarities. ...read more.

Conclusion

Retrieved May 08, 2007, from http://search.ebscohost.com/login.aspx?direct=true&db=anh&AN=21465131&site=ehost-live">AUSTRALIA: Country Conditions: Investment Climate Political Risk Services (2005b, January 01). Venezuela: Country Conditions Investment Climate. Retrieved May 08, 2007, from http://search.ebscohost.com/login.aspx?direct=true&db=bah&AN=21466137&site=ehost-live>VENEZUELA: Country Conditions: Investment Climate.</A Mann, J. (1992, September). Venezuela: Industry - Foreign Investment Remains Strong. Institutional Investor, Vol. 26, Iss. 10, pg. SS18 - 21. Retrieved May 02, 2007, from http://proquest.umi.com.ezproxy.auckland.ac.nz/pqdweb�?did=527020�&sid=1�&Fmt=3�&clientId=13395�&RQT=309�&VName=PQD Mann, J. a (2006, April 24). Chavez Plans to Take More Control Of Oil Away From Foreign Firms. Wall Street Journal, Eastern Edition, pg. A.1. Retrieved April 30, 2007, from http://proquest.umi.com.ezproxy.auckland.ac.nz/pqdweb�?did=1025905481�&sid=4�&Fmt=3�&clientId=13395�&RQT=309�&VName=PQD Martinez, R. (1992, September). Venezuela: Staying the Course. Institutional Investor, Vol 26, Iss. 10, pg. SS4 - 6. Retrieved May 01, 2007, from http://proquest.umi.com.ezproxy.auckland.ac.nz/pqdweb�?did=527012�&sid=5�&Fmt=3�&clientId=13395�&RQT=309�&VName=PQD SICE (2007). MERCOSUR Agreement. Retrieved April 30, 2007, from http://www.sice.oas.org/trade/mrcsr/TreatyAsun_e.ASP#CHAPTER_I Silva, J. (2007, February 10). Grabbing power in Venezuela. [Electronic Version] Boston Globe. 3 Edition. Boston, Mass: (pg. A.1) UNCTAD (2006). World Investment Report 2006 - FDI from Developing and Transition Economies: Implications for Development. Retrieved May 11, 2007, from http://www.unctad.org/sections/dite_dir/docs/wir06 UNCTAD (2007a). UNCTAD Investment Brief. Retrieved April 30, 2007, from www.unctad.org/en/docs/iteiiamisc20072_en.pdf UNCTAD (2007b, May 02). FDI in Brief: Australia. Retrieved May 02, 2007, from www.unctad.org/sectiones/dite_fdistat/docs/wid_ib_au_en.pdf UNCTAD (2007c, May 02). FDI in Brief: Venezuela. Retrieved May 02, 2007, from www.unctad.org/sectiones/dite_fdistat/docs/wid_ib_ve_en.pdf UNCTAD (2007d, May 02). WID Country Profile: Australia. Retrieved May 02, 2007, from http://www.unctad.org/Templates/Page.asp?intItemID=3198&lang=1 UNCTAD (2007e, May 02). WID Country Profile: Venezuela. Retrieved May 02, 2007, from http://www.unctad.org/Templates/Page.asp?intItemID=3198&lang=1 US Department of State (1994, February). Venezuela Economic Policy and Trade Practices. Retrieved April 28, 2007, from http://dosfan.lib.uic.edu/ERC/economics/trade_reports/1993/Venezuela.html Vogel, T. (1999, July 07). New Venezuelan Finance Minister Says Economy May Contract by 4%, Seeks Foreign Investment. Wall Street Journal, Eastern Edition, NY, pg. A14. Retrieved April 28, 2007, from http://proquest.umi.com.ezproxy.auckland.ac.nz/pqdweb�?did=42951688�&sid=17�&Fmt=3�& clientId=13395�&RQT=309�&VName=PQD Williams, F. (2005, February 21). Australian Concern over Xstrata Bid for WMC. [Electronic Version] The Age. Fairfax Digital: Sydney. WTO (2007a). Australia: Trade Policy Review. World Trade Organization. Retrieved April 14, 2007, from http://www.wto.org/english/thewto_e/countries_e/australia_e.htm WTO (2007c, May 12). Trade Related Investment Measures. Retrieved May 12, 2007, from www.wto.org/English/tratop_e/invest_e/invest_info_e.htm WTO (2007b). Venezuela: Trade Policy Review. World Trade Organization. Retrieved April 14, 2007, from http://www.wto.org/english/thewto_e/countries_e/venezuela_e.htm Foreign Direct Investment - Australia and Venezuela ...read more.

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