Book contents
- Frontmatter
- Dedication
- Acknowledgements
- Contents
- List of Cases
- List of Legislation
- List of Abbreviations
- The Changing Course of FDI: An Introduction
- Part I FDI and National Security: The Playing Field
- Part II The Traditional Approach: Ex Post Control
- Part III Towards Ex Ante Control: The Evolving Position
- Chapter 6 Risks to Host States
- Chapter 7 Systems and Consequences of FDI Control
- Part IV Ex Ante Evaluation on National Security Grounds in Practice
- A Look to the Future
- Bibliography
- Index
- About the Author
Chapter 7 - Systems and Consequences of FDI Control
from Part III - Towards Ex Ante Control: The Evolving Position
Published online by Cambridge University Press: 13 October 2018
- Frontmatter
- Dedication
- Acknowledgements
- Contents
- List of Cases
- List of Legislation
- List of Abbreviations
- The Changing Course of FDI: An Introduction
- Part I FDI and National Security: The Playing Field
- Part II The Traditional Approach: Ex Post Control
- Part III Towards Ex Ante Control: The Evolving Position
- Chapter 6 Risks to Host States
- Chapter 7 Systems and Consequences of FDI Control
- Part IV Ex Ante Evaluation on National Security Grounds in Practice
- A Look to the Future
- Bibliography
- Index
- About the Author
Summary
TOWARDS A MORE TARGETED APPROACH TO FOREIGN INVESTMENT
Liberalisation of FDI is a strong trend that is likely to continue into the future. Nevertheless, there are some signs of ‘backlash against FDI’ that make the regulatory framework in certain countries less welcoming to foreign investments, or at least to foreign investments from particular countries, sovereign-driven FDI or FDI directed at specific areas of the economy. This is a trend that, in any case, may offer support for a more targeted approach towards FDI flows.
Despite the generally positive attitude towards FDI flows, a truly ’open-door policy’ towards foreign investment does not seem to exist, or to have ever existed, anywhere. No country allows foreign capital, irrespective of its origin, to enter its economy with total freedom and to be freely invested in any area of the country. In fact, when UNCTAD analysed the legislative changes on FDI implemented between 1990 and 2009, it stressed the incidence of the promotion and liberalisation of FDI during this period: between 1992 and 2009 it reported 2,748 legislative changes worldwide, with 89% favouring FDI. However, despite the continuance of this global trend in favour of the liberalisation of FDI, many of these national regulations that include provisions aiming to increase FDI and that usually grant investors many benefits and guarantees, now increasingly also give host states the option to control FDI and to prevent it from entering their economy or certain firms on various grounds.
The global perception of threat has increased steadily in the last few years and national security concerns are increasingly affecting the development of international trade and FDI. This is especially evident as regards the protection of certain strategic industries and critical infrastructures. The changing origin of FDI and the possibility of certain areas of the economy becoming dominated by foreigners have raised national security concerns in many western economies and have fostered economic nationalism. These concerns are even greater in relation to sovereign-driven FDI. This is because of the awareness that not all countries share the same values and or behave in the same ways, and that their companies may act in accordance with political or ideological ideas rather than on a purely commercial basis, or at least ‘may not play by common rules or promote high standards of business conduct’.
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- Information
- Foreign Investment, Strategic Assets and National Security , pp. 221 - 256Publisher: IntersentiaPrint publication year: 2018