Democratic Institutions and Investment Inflows 179 including those based on the industrial organization approach,transaction cost economics,7 and trade and location theory.8 Dunning explains that international production is motivated by three sets of ad- vantages perceived by firms.9 The first set is a firm's ownership-specific advan- tages.These include its ownership of intangible assets and common governance of cross-border production.Some examples of intangible assets are product inno- vations,management practices,marketing techniques,and brand names.Diversi- fication across borders allows a firm to exploit economies of scale and to develop monopoly power based on its size and established position.The foreign investor's ownership-specific advantages are sensitive to property rights protection in the host country.In other words,an MNE's success is tied to the security of its intel- lectual and physical property in multiple countries. The second set of advantages concerns the firm's internalization advantages deriving from its hierarchical control of cross-border production.Internalization refers to a firm's direct control over its value-added activities in multiple coun- tries,as opposed to outsourcing,trade,or licensing.The size of a firm's internal- ization advantages correlates with the degree of transnational market failure.For example,where the risks of opportunism by foreign buyers and sellers are high, such as disrupting supplies and violating property rights in primary product and high technology industries,the firm has an incentive to claim hierarchical control of cross-border production.20 Where economic rents from exploiting oligopolistic or monopolistic market structures or large-scale production are high,the firm is also likely to exert hierarchical control of transnational production.The greater the internalization advantages,the more likely a firm is to pursue international production-hierarchical control of its assets,instead of trading or leasing.The exploitation of these advantages is affected by the antitrust or competition- oriented regulation in the host country. The third set of advantages refers to the location-specific advantages per- ceived by firms or the characteristics of host countries in terms of their economic environment or government policies.They may include scarce natural resources, abundant labor,high economic development,or favorable macroeconomic,mi- croeconomic,and FDI-specific government policies.For instance,oil companies have to produce overseas where required resources are available.Export-processing firms typically shift production based on labor cost.Firms also consider govern- ment policies on tariffs,domestic corporate taxation,investment or tax regula- tion of foreign firms,profit repatriation or transfer pricing,royalties on extracted 16.For example,Hymer 1976;and Caves 1971. 17.For example,Rugman 1981;and Teece 1981. 18.Vernon 1966.See also Dunning 1988 and 1993;and Caves 1996 for reviews of the literature on international production. 19.Dunning 1988 and 1993. 20.For example,metals firms are often MNEs.They centralize the management of different steps of production(mining,smelting,and milling)to avoid the risk of being held hostage by a supplier to whom they have outsourced an aspect of production
Democratic Institutions and Investment Inflows 179 including those based on the industrial organization approach,16 transaction cost economics," and trade and location theory." Dunning explains that international production is motivated by three sets of advantages perceived by firms." The first set is a firm's ownership-specific advantages. These include its ownership of intangible assets and common governance of cross-border production. Some examples of intangible assets are product innovations, management practices, marketing techniques, and brand names. Diversification across borders allows a firm to exploit economies of scale and to develop monopoly power based on its size and established position. The foreign investor's ownership-specific advantages are sensitive to property rights protection in the host country. In other words, an MNE's success is tied to the security of its intellectual and physical property in multiple countries. The second set of advantages concerns the firm's internalization advantages deriving from its hierarchical control of cross-border production. Internalization refers to a firm's direct control over its value-added activities in multiple countries, as opposed to outsourcing, trade, or licensing. The size of a firm's internalization advantages correlates with the degree of transnational market failure. For example, where the risks of opportunism by foreign buyers and sellers are high, such as disrupting supplies and violating property rights in primary product and high technology industries, the firm has an incentive to claim hierarchical control of cross-border production.20 Where economic rents from exploiting oligopolictic or monopolistic market structures or large-scale production are high, the firm is also likely to exert hierarchical control of transnational production. The greater the internalization advantages, the more likely a firm is to pursue international production-hierarchical control of its assets, instead of trading or leasing. The exploitation of these advantages is affected by the antitrust or competitionoriented regulation in the host country. The third set of advantages refers to the location-specific advantages perceived by firms or the characteristics of host countries in terms of their economic environment or government policies. They may include scarce natural resources, abundant labor, high economic development, or favorable macroeconomic, microeconomic, and FDI-specific government policies. For instance, oil companies have to produce overseas where required resources are available. Export-processing firms typically shift production based on labor cost. Firms also consider government policies on tariffs, domestic corporate taxation, investment or tax regulation of foreign firms, profit repatriation or transfer pricing, royalties on extracted 16. For example, Hymer 1976; and Caves 197 1. 17. For example, Rugman 1981; and Teece 1981. 18. Vernon 1966. See also Dunning 1988 and 1993; and Caves 1996 for reviews of the literature on international production. 19. Dunning 1988 and 1993. 20. For example, metals firms are often MNEs. They centralize the management of different steps of production (mining, smelting, and milling) to avoid the risk of being held hostage by a supplier to whom they have outsourced an aspect of production
180 International Organization natural resources,antitrust regulation,technology transfer requirements,intellec- tual property protections,and labor market regulation. In the context of our analysis,the connection between politics and FDI inflows hinges on the interaction between host governments and MNEs.Firms select in- vestment sites based on how well their ownership-specific and internalization ad- vantages mesh with location-specific benefits.21 Host government policies create location-specific conditions that affect how well a firm can exploit its advantages. The logic of international production discussed above suggests the following im- plications that set the stage for our analysis of the effects of democratic institu- tions on FDI infows.First,the MNE's ownership-specific and internalization advantages often result from,and are further enhanced by,the oligopolistic or mo- nopolistic market structures.Host government regulatory policies can limit the use of these advantages,particularly through the application of antitrust and other competition-oriented legislation.Second,endowed with the ownership-specific and internalization advantages,the MNE is more competitive than,and often displaces, indigenous firms in the host country.The host government may adopt industrial pol- icy that either protects indigenous businesses from the MNE or favors the MNE. Third,expecting FDI to bring about managerial skills and production technology beneficial to economic growth,the host government may offer foreign investors fi- nancial and fiscal incentives.Such incentives not only affect the choice of FDI lo- cation,but also strengthen the competitiveness of foreign investors.Finally,the MNE must rely on the host government for protection of its property rights in pro- prietary assets,without which its ownership-specific advantages would disappear. These implications depict a contrast between a good and a bad investment cli- mate for MNEs.A good climate is one in which the location-specific advantages existing in the host country facilitate the MNE's exploitation of its ownership- specific and internalization advantages.For example,the host government pro- vides favorable regulation,preferential treatment for MNEs,and sound property rights protection.Conversely,a bad investment climate is one where the condi- tions in the host country hinder the MNE from exploiting its ownership-specific and internalization advantages.Firms that enjoy monopolistic or oligopolistic po- sitions may shy away from host countries with strong antitrust regulation.MNEs may also balk at weak property rights protection and strong preferences of the host government for domestic firms.Domestic political institutions,because they define the policymaking environment,have significant effects on the quality of the investment climate. Suppressive Effect of Democratic Institutions on FDI Inflows The nature of domestic political institutions is defined largely by the relative strength of democratic versus autocratic characteristics of a country's political system.Gen- erally speaking,it depends on the degree to which citizens are able to choose how 21.Dunning1993,548-51
180 International Organization natural resources, antitrust regulation, technology transfer requirements, intellectual property protections, and labor market regulation. In the context of our analysis, the connection between politics and FDI inflows hinges on the interaction between host governments and MNEs. Firms select investment sites based on how well their ownership-specific and internalization advantages mesh with location-specific benefih2' Host government policies create location-specific conditions that affect how well a firm can exploit its advantages. The logic of international production discussed above suggests the following implications that set the stage for our analysis of the effects of democratic institutions on FDI inflows. First, the MNE's ownership-specific and internalization advantages often result from, and are further enhanced by, the oligopolistic or monopolistic market structures. Host government regulatory policies can limit the use of these advantages, particularly through the application of antitrust and other competition-oriented legislation. Second, endowed with the ownership-specific and internalization advantages, the MNE is more competitive than, and often displaces, indigenous firms in the host country. The host government may adopt industrial policy that either protects indigenous businesses from the MNE or favors the MNE. Third, expecting FDI to bring about managerial skills and production technology beneficial to economic growth, the host government may offer foreign investors financial and fiscal incentives. Such incentives not only affect the choice of FDI location, but also strengthen the competitiveness of foreign investors. Finally, the MNE must rely on the host government for protection of its property rights in proprietary assets, without which its ownership-specific advantages would disappear. These implications depict a contrast between a good and a bad investment climate for MNEs. A good climate is one in which the location-specific advantages existing in the host country facilitate the MNE's exploitation of its ownershipspecific and internalization advantages. For example, the host government provides favorable regulation, preferential treatment for MNEs, and sound property rights protection. Conversely, a bad investment climate is one where the conditions in the host country hinder the MNE from exploiting its ownership-specific and internalization advantages. Firms that enjoy monopolistic or oligopolistic positions may shy away from host countries with strong antitrust regulation. MNEs may also balk at weak property rights protection and strong preferences of the host government for domestic firms. Domestic political institutions, because they define the policymaking environment, have significant effects on the quality of the investment climate. Suppressive Effect of Democratic Institutions on FDI Inflows The nature of domestic political institutions is defined largely by the relative strength of democratic versus autocratic characteristics of a country's political system. Generally speaking, it depends on the degree to which citizens are able to choose how 21. Dunning 1993, 548-5 1
Democratic Institutions and Investment Inflows 181 and by whom they are governed.Democratic institutions under a representative de- mocracy or"polyarchy"22 typically include free and fair elections of the executive and legislative offices,the right of citizens to vote and compete for public office, and institutional guarantees for the freedom of association and expression such as an independent judiciary and the absence of censorship.23 These institutions sup- ply"regular constitutional opportunities for changing the governing officials,and a social mechanism that permits the largest possible part of the population to in- fluence major contenders for political office."24 Under democratic institutions,pol- iticians have incentives to develop public policies reflecting the popular sentiment.25 Representative democracy also allows various interests to be represented in the leg- islature,thereby constraining executive power.In addition,the stronger a country's democratic characteristics,the more likely its social interests are to get organized and participate in political competition.Even in fledgling democracies,the state is subject to a broad spectrum of political interests as it attempts to broker compliance with democratic rules,offering relevant political actors welfare improvements to induce their consent.26 Hence,democratic political processes are characterized by the influence of diverse opinions over electoral and public policymaking outcomes. In contrast,autocratic characteristics derive from "limited pluralism"as op- posed to "almost unlimited pluralism"under a representative democracy.27 They may include government co-optation of civil society leadership or legal limitation of pluralism,a single leader or small ruling clique,and weak political mobiliza- tion.Regardless of the methods rulers use to enhance their legitimacy,autocratic politics is biased in favor of narrow elite control over public policy. Countries exhibit heterogeneity in how and to what extent they conform to dem- ocratic or autocratic properties.28 Despite such cross-sectional and temporal het- erogeneity,regime characteristics within the democratic or autocratic category tend to correlate with and reinforce each other.For example,free elections are sustain- able only if leaders are constrained through some mechanism by the citizenry; free election can effectively reflect the will of the people only if citizens partici- pate actively in political competition.To a great extent,the relative strength of democratic and autocratic characteristics defines the nature of political institu- tions.The manner in which these competing democratic and autocratic character- istics are manifested in democratic institutions has implications for foreign direct 22.Though not the focus of our analysis,other variants of democracy include democracy based on a one-party model or direct or participatory democracy,where citizens are directly involved in policy- making.Held 1993,15. 23.Dahl1971and1998. 24.Lipset1960,27. 25.Politicians converge to the median voter's preference in a majoritarian system and to the ideal point of the median voter of popularly elected legislators in a proportional representation system.Hu- ber and Powell 1994. 26.Przeworski 1991,32 27.Linz2000. 28.The development of democracy is not a linear,monotonic process,but is punctuated by rever- sals and sudden changes.Casper 1995
Democratic Institutions and Investment Inflows 181 and by whom they are governed. Democratic institutions under a representative democracy or "polyarchy" 22 typically include free and fair elections of the executive and legislative offices, the right of citizens to vote and compete for public office, and institutional guarantees for the freedom of association and expression such as an independent judiciary and the absence of censorship.23 These institutions supply "regular constitutional opportunities for changing the governing officials, and a social mechanism that permits the largest possible part of the population to influence major contenders for political office." 2%nder democratic institutions, politicians have incentives to develop public policies reflecting the popular sentiment.25 Representative democracy also allows various interests to be represented in the legislature, thereby constraining executive power. In addition, the stronger a country's democratic characteristics, the more likely its social interests are to get organized and participate in political competition. Even in fledgling democracies, the state is subject to a broad spectrum of political interests as it attempts to broker compliance with democratic rules, offering relevant political actors welfare improvements to induce their consent.26 Hence, democratic political processes are characterized by the influence of diverse opinions over electoral and public policymaking outcomes. In contrast, autocratic characteristics derive from "limited pluralism" as opposed to "almost unlimited pluralism" under a representative democracy.27 They may include government co-optation of civil society leadership or legal limitation of pluralism, a single leader or small ruling clique, and weak political mobilization. Regardless of the methods rulers use to enhance their legitimacy, autocratic politics is biased in favor of narrow elite control over public policy. Countries exhibit heterogeneity in how and to what extent they conform to democratic or autocratic proper tie^.^^ Despite such cross-sectional and temporal heterogeneity, regime characteristics within-the democratic or autocratic category tend to correlate with and reinforce each other. For example, free elections are sustainable only if leaders are constrained through some mechanism by the citizenry; free election can effectively reflect the will of the people only if citizens participate actively in political competition. To a great extent, the relative strength of democratic and autocratic characteristics defines the nature of political institutions. The manner in which these competing democratic and autocratic characteristics are manifested in democratic institutions has implications for foreign direct 22. Though not the focus of our analysis, other variants of democracy include democracy based on a one-party model or direct or participatory democracy, where citizens are directly involved in policymaking. Held 1993, 15. 23. Dahl 1971 and 1998. 24. Lipset 1960, 27. 25. Politicians converge to the median voter's preference in a majoritarian system and to the ideal point of the median voter of popularly elected legislators in a proportional representation system. Huber and Powell 1994. 26. Przeworski 1991, 32. 27. Linz 2000. 28. The development of democracy is not a linear, monotonic process, but is punctuated by reversals and sudden changes. Casper 1995
182 International Organization investors.Below we suggest three mechanisms through which these institutions hinder FDI inflows. Effect on MNE exploitation of monopolistic or oligopolistic position.Dem- ocratic institutions in host countries attenuate many MNEs'ability to exploit and enhance their monopolistic or oligopolistic positions.As discussed earlier,firms invest abroad to take advantage of their ownership-specific and internalization ad- vantages,advantages that often result from,and further result in,oligopolistic or monopolistic market structures.29 Such large MNEs constitute the bulk of FDI,30 possess enormous market power,and have significantly shaped trade patterns and the location of economic activities in the global economy.31 In the host countries, such MNEs seek to create and strengthen their oligopolistic or monopolistic posi- tions that result in higher returns.The associated imperfect market structures,how- ever,lead to less optimal allocation of resources in the host economy than perfection competition.While MNEs consider the pursuit of monopolistic or oligopolistic positions a legitimate corporate strategy for greater returns,their desire to create, maintain and increase their monopoly or oligopoly positions sets them at odds with host country governments,particularly democratic ones.32 In more democratic host governments,elected politicians presumably encour- age and manage inward investment to improve national economic performance, benefit their electoral constituencies,and increase their odds of being reelected. That many MNEs may decrease market competition motivates elected politicians to limit the monopoly or oligopoly positions of the relevant MNEs through public policy.In reaction,the MNEs may seek to bribe and collude with the host govern- ment to influence domestic politics of the host country.33 However,freedom of expression and open media bring about relatively better monitoring of elected pol- iticians and allow the opponents of FDI to access the public policymaking process relatively more easily.Hence,democratic characteristics of the host country col- lectively constrain the pursuit by many MNEs of monopoly or oligopoly. Conversely,more autocratic host governments are less likely to clash and more likely to collude with the oligopoly or monopoly-seeking MNEs.By definition, the size of the winning coalition for autocratic leaders is smaller than for demo- cratic leaders because autocratic rulers depend less on broad popular support to stay in power.While such rulers are happy if FDI improves national economic 29.Dunning 1993;and Stopford and Strange 1991,74. 30.Graham 1996. 31.For example,the hundred largest MNEs control about 20 percent of global foreign assets,em- ploy about 6 million workers and account for about 30 percent of total world sales of all MNEs.Con- temporary MNEs further strengthen themselves vis-a-vis the state by collaborating with each other through mergers,acquisitions,and strategic alliances.The number of strategic alliances-cooperative ventures between firms of different countries to undertake research and development-rose from 280 in 1991 to 430 in 1993.United Nations Conference on Trade and Development 1997,8,14. 32.Our argument is consistent with the evidence at the aggregate level in Oneal and Oneal that efforts to pursue supernormal profits by British and American MNEs appear thwarted in the develop- ing regions.Oneal and Oneal 1988. 33.Bergsten,Horst,and Moran 1978;and Tarzi 1991
182 International Organization investors. Below we suggest three mechanisms through which these institutions hinder FDI inflows. Effect on MNE exploitation of monopolistic or oligopolistic position. Democratic institutions in host countries attenuate many MNEs' ability to exploit and enhance their monopolistic or oligopolistic positions. As discussed earlier, firms invest abroad to take advantage of their ownership-specific and internalization advantages, advantages that often result from, and further result in, oligopolistic or monopolistic market structure^.'^ Such large MNEs constitute the bulk of FDI,30 possess enormous market power, and have significantly shaped trade patterns and the location of economic activities in the global e~onorny.~' Inthe host countries, such MNEs seek to create and strengthen their oligopolistic or monopolistic positions that result in higher returns. The associated imperfect market structures, however, lead to less optimal allocation of resources in the host economy than perfection competition. While MNEs consider the pursuit of monopolistic or oligopolistic positions a legitimate corporate strategy for greater returns, their desire to create, maintain and increase their monopoly or oligopoly positions sets them at odds with host country governments, particularly democratic ones.32 In more democratic host governments, elected politicians presumably encourage and manage inward investment to improve national economic performance, benefit their electoral constituencies, and increase their odds of being reelected. That many MNEs may decrease market competition motivates elected politicians to limit the monopoly or oligopoly positions of the relevant MNEs through public policy. In reaction, the MNEs may seek to bribe and collude with the host government to influence domestic politics of the host country." However, freedom of expression and open media bring about relatively better monitoring of elected politicians and allow the opponents of FDI to access the public policymaking process relatively more easily. Hence, democratic characteristics of the host country collectively constrain the pursuit by many MNEs of monopoly or oligopoly. Conversely, more autocratic host governments are less likely to clash and more likely to collude with the oligopoly or monopoly-seeking MNEs. By definition, the size of the winning coalition for autocratic leaders is smaller than for democratic leaders because autocratic rulers depend less on broad popular support to stay in power. While such rulers are happy if FDI improves national economic 29. Dunning 1993; and Stopford and Strange 1991, 74. 30. Graham 1996. 31. For example, the hundred largest MNEs control about 20 percent of global foreign assets, employ about 6 million workers and account for about 30 percent of total world sales of all MNEs. Contemporary MNEs further strengthen themselves vis-a-vis the state by collaborating with each other through mergers, acquisitions, and strategic alliances. The number of strategic alliances-cooperative ventures between firms of different countries to undertake research and development-rose from 280 in 1991 to 430 in 1993. United Nations Conference on Trade and Development 1997, 8, 14. 32. Our argument is consistent with the evidence at the aggregate level in Oneal and Oneal that efforts to pursue supernormal profits by British and American MNEs appear thwarted in the developing regions. Oneal and Oneal 1988. 33. Bergsten, Horst, and Moran 1978; and Tarzi 1991
Democratic Institutions and Investment Inflows 183 performance,their primary focus is to generate more revenues for the ruling clique.34 As long as they obtain increased revenues and benefits from foreign cap- ital,these rulers would tolerate the imperfect competition and concentrated mar- ket power of oligopolistic or monopolistic foreign firms.Narrow elite control further allows rulers to subdue dissenting voices within or outside of the regime.As a result,the weaker the host country's democratic institutions,the less likely the host government is to limit the monopoly or oligopoly position of the MNEs. Effect on host country industrial policy.Industrial policy is another arena in which democratic institutions in the host country degrade conditions for MNEs.Be- cause of their ownership-specific and internalization advantages and exposure to international competition,MNEs are typically more competitive than indigenous firms in the developing host country.While inward investment raises competition in the host country and may improve the allocation of resources,foreign firms typ- ically displace local businesses and even compete for loans in the host country.35 Just as with trade,the growing presence of more-competitive foreign firms often turns less-competitive local firms into losers.Local business owners and the un- employed,suffering concentrated losses,are likely to get organized and lobby for protective industrial policy from the government.While MNEs also bring about new jobs and resources,such benefits do not directly go to the displaced capital and workers. Grievances are likely to be more pronounced in developing countries,where social welfare systems are not well developed and provide limited compensation for displacement.36Where democratic institutions are strong,the opponents of FDI have multiple avenues to influence public policymaking.Domestic interests that lose out to the MNEs can resort to elections,campaign finance,interest groups, public protests,and media exposure.Under such pressures,the host government is compelled to cushion the blow to domestic losers by subsidizing less competi- tive indigenous firms,imposing more restrictive entry conditions on MNEs such as joint ownership,limiting the sectors open to foreign capital,or demanding solely foreign financing of initial investments.It also could pose more restrictive operat- ing requirements in terms of local purchases of capital goods and raw materials, local employment,the proportion of output to be exported,and the use of technol- ogy.37 These policies reduce the MNE's degree of control over its overseas pro- duction and weaken its competitiveness. 34.01s0n1993 35.Graham and Krugman 1995;and Stopford and Strange 1991. 36.Such societal opposition is discounted and indeterminate if local firms are concerned about for- eign retaliation or their own investment entry into foreign countries,as Jonathan Crystal shows to be the case with U.S.firms.In the developing world,however,local firms are not likely to have these con- cerns and thus are more likely to organize to pursue protection from the host government.Crystal 1998. 37.See Dunning 1993,559-60 for a review of the host government policies that affect inward investment.Although the latitude available for such policies has diminished in the context of the World Trade Organization(WTO)and other international agreements,an international regime on foreign in- ward investment is still lacking,and host countries have exhibited great creativity in maintaining ben- efits for domestic producers
Democratic Institutions and Investment Inflows 183 performance, their primary focus is to generate more revenues for the ruling clique.34 As long as they obtain increased revenues and benefits from foreign capital, these rulers would tolerate the imperfect competition and concentrated market power of oligopolistic or monopolistic foreign firms. Narrow elite control further allows rulers to subdue dissenting voices within or outside of the regime. As a result, the weaker the host country's democratic institutions, the less likely the host government is to limit the monopoly or oligopoly position of the MNEs. Effect on host country industrial policy. Industrial policy is another arena in which democratic institutions in the host country degrade conditions for MNEs. Because of their ownership-specific and internalization advantages and exposure to international competition, MNEs are typically more competitive than indigenous firms in the developing host country. While inward investment raises competition in the host country and may improve the allocation of resources, foreign firms typically displace local businesses and even compete for loans in the host country." Just as with trade, the growing presence of more-competitive foreign firms often turns less-competitive local firms into losers. Local business owners and the unemployed, suffering concentrated losses, are likely to get organized and lobby for protective industrial policy from the government. While MNEs also bring about new jobs and resources, such benefits do not directly go to the displaced capital and workers. Grievances are likely to be more pronounced in developing countries, where social welfare systems are not well developed and provide limited compensation for di~placement.~~ Where democratic institutions are strong, the opponents of FDI have multiple avenues to influence public policymaking. Domestic interests that lose out to the MNEs can resort to elections, campaign finance, interest groups, public protests, and media exposure. Under such pressures, the host government is compelled to cushion the blow to domestic losers by subsidizing less competitive indigenous firms, imposing more restrictive entry conditions on MNEs such as joint ownership, limiting the sectors open to foreign capital, or demanding solely foreign financing of initial investments. It also could pose more restrictive operating requirements in terms of local purchases of capital goods and raw materials, local employment, the proportion of output to be exported, and the use of technol- ~gy.~~ These policies reduce the MNE's degree of control over its overseas production and weaken its competitiveness. 34. Olson 1993. 35. Graham and Krugman 1995; and Stopford and Strange 1991. 36. Such societal opposition is discounted and indeterminate if local firms are concerned about foreign retaliation or their own investment entry into foreign countries, as Jonathan Crystal shows to be the case with U.S. firms. In the developing world, however, local firms are not likely to have these concerns and thus are more likely to organize to pursue protection from the host government. Crystal 1998. 37. See Dunning 1993, 559-60 for a review of the host government policies that affect inward investment. Although the latitude available for such policies has diminished in the context of the World Trade Organization (WTO) and other international agreements, an international regime on foreign inward investment is still lacking, and host countries have exhibited great creativity in maintaining benefits for domestic producers