Good Governance and Foreign Direct Investment: A Legal Contribution to a Balanced Economic Development in the East African Community (EAC)

Abstract

One of the objectives of the East African Community (EAC) is the promotion of a balanced economic development between its Partner States: Burundi, Kenya, Rwanda, Tanzania, and Uganda. And one of the ways to reach this economic development is the attraction of investment, especially Foreign Direct Investments (FDI). Paradoxically some theories submit that a regional integration between countries characterized by striking asymmetries, as is the case between EAC Partner States, leads to the agglomeration of FDI in one or two countries with the best combination of key FDI determinants. As a consequence of this inequitable attraction of FDI, the frustrated countries would be tempted to defect from the regional integration initiative. This would seriously undermine the regional integration process in the EAC. Based on the history of the EAC, this thesis takes the eventuality of such a threat seriously. Therefore, after a throughout analysis of the current situation in the EAC, it suggests that the observance of good governance principles, i.e. properness, accountability, transparency, participation and respect for human rights, in the building up of strong regional institution and the making of adequate policies related to investment would help mitigate the adverse consequences of asymmetries between the EAC Partner States. In this perspective, this thesis can be considered as a legal contribution to the complex mechanism that needs to be put in place to ensure an equitable distribution of FDI between EAC Partner States, which – in turn – would foster a balanced and harmonious development between them.