Is investment protectionism on the rise?
This OECD paper explains how investment protectionism can take many forms: such as new rules or more rigorous enforcement of existing rules; greater conditionality regarding regulatory approval mechanisms; or a more expansive idea of strategic industries, the national interest and national security. Sometimes even disapproving pronouncements by governments or fears of a popular backlash can stop a potential cross-border investment.
Given the sustained downturn in global flows of foreign direct investment (FDI), the suggestion that rising protectionism is partly to blame is gaining traction. Evidence of investment protectionism tends to be anecdotal, because it can be difficult to measure the different ways a government could discriminate against foreign investors. The OECD FDI Regulatory Restrictiveness Index can provide part of the answer. It provides an objective reality check on whether the global policy trend is turning against foreign investment.