encouraging informed debate
through international trade research

This OECD paper explains how investment protectionism can take many forms: such as new rules or more rigorous enforcement of existing ones; greater conditionality attached to regulatory approval mechanisms; or a more expansive notion of strategic industries, the national interest and national security. Sometimes disapproving pronouncements by the government or fears of a popular backlash are enough to stop a potential cross-border investment in its tracks.

Given the sustained downturn in global flows of foreign direct investment (FDI), the suggestion that rising protectionism is partly to blame is gaining currency. Evidence of investment protectionism tends to be anecdotal, given the difficulties in measuring the different ways a government might discriminate against foreign investors. The OECD FDI Regulatory Restrictiveness Index can help to shed light on the question. It measures statutory barriers against foreign investment in over 60 countries worldwide and how they have changed over time. By looking only at discrimination on the books and not at how rules are implemented, it can only provide part of the answer, but it does provide an objective reality check on the question of whether the global policy trend is turning against foreign investment.

Source: Organization for Economic Cooperation and Development (OECD)

Download report