Hindu Business Line:Sunday,January 29, 2012.
Can the freedom of information (FOI) increase foreign direct investment (FDI) to developing countries? This is the question that Daniel Berliner of University of Washington explores in The impact of freedom of information laws on foreign direct investment in developing countries (www.ssrn.com). His answer is that FOI laws increase FDI inflows per GDP, but only after they have been in effect for several years, and only where the rule of law is high.
While highlighting the importance of addressing the challenges of implementation and enforcement, the author reminds that implementation should be expected to take time if a new policy requires substantial changes at multiple levels of government, such as the creation of new agencies or new roles within existing agencies (such as information offices or officers), new practices (such as new systems to manage documents), and new types of behaviour (openness as opposed to secrecy).
According to Berliner, the FOI laws are not important solely for their much-touted benefits to democracy, accountability, free press and civil society. He notes that these laws also play an important role in shaping economic incentives to which investors respond.
Averring, therefore, that FOI laws can increase transparency in ways that decrease investor uncertainty and solve information asymmetries, the author observes that they can also increase the credibility of policymakers’ commitments, by giving potential sanctioning power to a diffused body of domestic actors.
“Given the importance of information in the global economy, it is surprising how little research has addressed the role played by information policy itself. FOI appears to be, in fact, good for business.”
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