We investigate the potential effects of the newly negotiated WTO Investment Facilitation for Development (IFD) Agreement depending on the coverage of implemented provisions. The analysis is methodologically based on a multi-region general equilibrium simulation model including bilateral representative firms, foreign direct investment (FDI) and monopolistic competition. The results suggest substantial global welfare gains ranging between 0.63% for the IFD binding provisions and 1.73% for all IFD provisions. Countries in the group of Friends of Investment Facilitation for Development (FIFD) as well as low and middle-income countries gain the most. The benefits for all regions increase together with the coverage of the implemented IFD provisions as well as with the rising number of participating countries. This provides a strong incentive for non-participating developing countries to join the IFD, reform their investment frameworks in line with the IFD agenda, and use the support structure contained in the section on special and differential treatment.
We investigate the potential effects of the newly negotiated WTO Investment Facilitation for Development (IFD) Agreement depending on the coverage of implemented provisions. The analysis is methodologically based on a multi-region general equilibrium simulation model including bilateral representative firms, foreign direct investment (FDI) and monopolistic competition. The results suggest substantial global welfare gains ranging between 0.63% for the IFD binding provisions and 1.73% for all IFD provisions. Countries in the group of Friends of Investment Facilitation for Development (FIFD) as well as low and middle-income countries gain the most. The benefits for all regions increase together with the coverage of the implemented IFD provisions as well as with the rising number of participating countries. This provides a strong incentive for non-participating developing countries to join the IFD, reform their investment frameworks in line with the IFD agenda, and use the support structure contained in the section on special and differential treatment.
We investigate the potential effects of the newly negotiated WTO Investment Facilitation for Development (IFD) Agreement depending on the coverage of implemented provisions. The analysis is methodologically based on a multi-region general equilibrium simulation model including bilateral representative firms, foreign direct investment (FDI) and monopolistic competition. The results suggest substantial global welfare gains ranging between 0.63% for the IFD binding provisions and 1.73% for all IFD provisions. Countries in the group of Friends of Investment Facilitation for Development (FIFD) as well as low and middle-income countries gain the most. The benefits for all regions increase together with the coverage of the implemented IFD provisions as well as with the rising number of participating countries. This provides a strong incentive for non-participating developing countries to join the IFD, reform their investment frameworks in line with the IFD agenda, and use the support structure contained in the section on special and differential treatment.
Written by Lauro Panella, Margarida Arenga, Marco Centrone, Christof Cesnovar, Meenakshi Fernandes, Aleksandra Heflich, Lenka Jančová, Christa Kammerhofer-Schlegel, and Jérôme Saulnier.
Why this study?Since the signature of the Treaty of Rome in 1957, European integration has ensured peace and advanced democratic governance, environmental protection, innovation and economic growth. Efforts to create the euro and to strengthen the single market are credited with raising incomes by at least 6 %.
Yet, Europe could offer more to ensure an effective response to cross-border challenges such as climate change, widening social inequality and wars that affect people’s daily lives and future prospects. The European Union (EU) could take further action to boost the provision of public goods, generate efficiency gains, reduce administrative costs and integrate the impacts of externalities.
This study applies the cost of non-Europe methodology to assess the potential benefits of more EU action in 10 policy areas. It considers different intensities and forms of EU action, from legislative to non-legislative, budgetary spending, savings for national budgets, investment and guarantees, assistance, supervision and enforcement action or involving citizens and communication.
What are the key findings?This study investigates where the greatest opportunities lie for more EU action – which has the potential to generate up to €3 trillion each year by 2032, or about 18 % of the EU’s 2022 GDP. This is equivalent to €6 700 of potential benefits of greater EU action per citizen per year in the EU.Theoretical foundations and practical considerations, EPRS, European Parliament, October 2023.
The benefits reflect economic gains, as well as gains in terms of social and fundamental rights, and also protection of the environment. The benefits of more EU action could take up to 10 years to realise, depending on the policy area and the specific measures underlying the EU action.
Based on a mapping of the cost of non-Europe, the study identifies 10 key proposals for EU action (one per policy area analysed) that are most relevant to realising Europe’s untapped potential. Each key proposal is supported by resolutions and reports adopted by the European Parliament during the 2019-2024 legislature. Findings from this study can contribute to the setting of EU policy priorities in the 2024-2029 legislature.
What are the conclusions?The costs of EU inaction are high. Citizens, civil society and businesses are paying the costs of a weak Europe. They pay for it in terms of lower income and revenues, lower living standards, and lower quality of life.
Potential benefits of ambitious common EU action in 10 policy areas Source: EPRSMore Europe does not imply a reduction in benefits for Member States. EU action could take many forms, as illustrated above. Such action naturally need not replace, but could rather enhance the action taken by Member States themselves.
The benefit of more EU action could be greater and more sustainable when providing public goods, such as clean air and good working conditions, with a holistic approach. For example, energy policy should consider low-income and rural populations. Social policy must account for the economic situation and ensure that no-one is left behind. Economic reforms should benefit all citizens.
Read the complete study on ‘Ten ways that Europe could do more for you – Mapping the cost of non-Europe‘ in the Think Tank pages of the European Parliament.