Financing European Defence: Time to Call the European Investment Bank? IES Policy Brief Issue 2014/05/July 2014

Summary. Financing research and development programmes have never been more expensive in Europe. Defence budgets are on the wane, international competition is fierce and high-end technologies are increasingly expensive. Europe’s defence-industrial base is under significant strain, and options are needed to fund elements of a sector that is still crucial to Europe’s security and industry. This Policy Brief argues that the European Investment Bank could play a much greater role in Europe’s defence sector. As a public-private institution the Bank could serve as a life-line to defence R&D, dual-use projects and support for SMEs, especially where regional clusters are involved.

Law and Foreign Direct Investment. IES WORKING PAPER 4/2011

In this paper we examine the effect of law on foreign direct investment outflows with a specific interest in the relationship between international investment law and domestic private property laws. Our results indicate that FDI investor is indifferent to host country property rights, hence shareholder protection by law is not a significant determinant of FDI outflows. We argue that FDI, in contrast with other types of capital flows, can effectively mitigate the agency problem through majority ownership and control, hence reduce exposure to ex-post expropriation by the affiliate. On the other hand, FDI investor remains exposed to risk of expropriation by the host government and is strongly sensitive to the enforcement of law in the host country. In contrast with recent literature we conclude that there are no causal relationship between bilateral investment treaties and FDI.