On investment measures and trade

While this study will touch upon the policy implications of trade in goods and services, its main focus is on resource allocation and welfare implication of policies regarding trade in factors. In particular, we will examine policies on foreign direct investment and the associated trade-related investment measures (TRIMs). In fact, member nations of GATT have recognised the trade-restricting and distorting effects of investment measures, and in the Uruguay Round agreements it was agreed that all TRIMs to be eliminated within two, five and seven years, respectively, for developed, developing, and least-developed contracting economies. Nevertheless, there is little consensus on how to define TRIMs broadly and what may be their effects on trade, investment and welfare. In this paper, we aim to make a modest contribution toward the theoretical analysis of these issues. In particular, we will illustrate the effects of TRIMs from the perspective of both theory and policy making by way of presenting key results from mostly our own recent published work on this topic.