Foreign Direct Investment (FDI) forms an important component of global economic growth and competitiveness, providing long-lasting links and integration between economies and societies. The benefits of FDI are well documented and recognized, with the following presenting a non-exhaustive list: increased employment, economic growth, human resource development, international trade promotion, social progress, development of regional economies, finance and technology provision, increased exports, innovation, access to informal/formal networks, and improved capital flow. With FDI serving as a crucial indicator of global integration and economic health, most countries have historically sought to maximize favorable FDI conditions.
Over the last several decades, many countries have recognized that the bountiful opportunities brought by FDI could also come with risks. While each country may perceive these risks in their own way and with their distinct security concerns in mind, the mechanism most often used to ensure that FDI benefits and risks are properly managed is FDI screening. This term refers, on a general level, to procedures for assessing, investigating, authorizing, conditioning, prohibiting, or unwinding FDI. Through FDI screening, countries can attract quality FDI and protect their national interests simultaneously.
This FDI Screening Primer is a resource for countries considering developing FDI screening measures, as well as for countries with FDI screening mechanisms in place who wish to update, strengthen, review, reform, or expand their current framework. The Primer’s objective is to provide neutral, high-quality, useful information and good practices for an FDI screening mechanism, ultimately for the purpose of positively maximizing FDI benefits while minimizing risks. The Primer offers FDI stakeholders a useful toolbox for deepening understanding of FDI screening, FDI screening implementation practices, and what the future may hold for this fast-development field.
The objective of this Primer is to be descriptive, not prescriptive, so that countries can consider and apply FDI screening frameworks, regulatory components, and good practices which account for their own national contexts and based on their own careful and thoughtfully considered assessment of national security interests.
This resource is composed of several easily navigable sections meant to be user-friendly, clear, concise, and widely applicable. The Primer’s first section covers FDI basics, such as what FDI is, the kinds of FDI, the definition of FDI screening, and important distinctions in order for readers to fully understand the basic concepts discussed in the rest of the document. The Primer’s next section provides information on the overall objectives and justifications guiding different countries’ frameworks, followed by a section covering different implementation models and the components of FDI screening regulations and systems that exist worldwide. The Primer then offers a section composed of a repository of good practices that can be considered by countries seeking to develop or strengthen their FDI regimes. The Primer concludes with a summary of main points and perspectives on what the future may hold for global FDI screening practices. A list of resources in the last section gives readers options for further reading.
