1097
International Investment
and Colonial Control:
A New Interpretation
JEFFRY A.FRIEDEN
The origins of colonial imperialism have long been a topic of
intense debate. In this article, Jeffry Frieden examines the
relationship between different forms of international investment
and varying political ties among developed and developing
countries. Frieden argues that direct colonial control was likely
when international investments were particularly easy to seize or
protect unilaterally, as was the case with raw materials or
agricultural investments. Where investments were more difficult
to seize or protect, as with multinational manufacturing affiliates,
colonialism was less likely to take hold. Frieden does not claim
that international investment caused imperialism. Rather, he argues
only that colonialism and site-specific international investments
coincided historically and were mutually reinforcing. In the
twentieth century, as imperialism came under challenge and as
manufacturing superseded extractive investments, colonialism
gradually became obsolete.... This article recasts the relationship between international investment and
colonialism in a more general context. Putative ties between metropolitan
investment and colonial control are one subset of a problem associated with the
monitoring and enforcement of property rights across national jurisdictions. Cross-
border investment involves an implicit or explicit contract between the host country
and the investor. The arrangements developed to monitor and enforce these
contracts—from gunboat diplomacy to private negotiations—are varied
institutional forms responding to different characteristics of the investments and
the environment. Colonialism is a particular, perhaps particularly noxious, form
that the “resolution” of these quasi-contractual issues can take: the use of force
by a home government to annex the host region and so eliminate the
interjurisdictional nature of the dispute.
This approach leads to two principal dimensions of variation in overseas
investments expected to be associated with different levels of interstate conflict