Control Of Foreign Investment Research Articles

Good for the environment? Foreign investment opening in service sector and firm's energy efficiency

Until now, studies on the environmental effect of foreign investment opening (FIO) in service sector are still blank. Actually, development of service sector is significant force for promoting economic modernization for the countries, thus development of service sector is extremely significant for developing countries. In this paper, we select China, the largest developing country, as representative country, in studying environmental effect of FIO in service sector. Our analyses construct theoretical model in studying impacts of FIO in service sector on enterprise's energy efficiency. Then, our analyses employ strictly exogenous policy change of China's foreign investment control clauses to measure FIO in service sector, and empirically identify the causal effects of FIO in service sector on firm's energy efficiency by using unique energy consumption data of Chinese enterprises from 2001 to 2012. Our results imply FIO in service sector could raise energy efficiency, suggesting that FIO in service sector has a positive effect on the environment. Further mechanism tests show that FIO in service sector could lead to improvement of energy efficiency by technology spillover effect and innovation effect. Our analyses give the first evidence on environmental impact of FIO in service sector, which reveals its significant role in promoting economic development of developing countries.

Priority of public interests in the regulation of foreign participationin strategic sectors of the economy

The author discusses some topical issues of the balance of private and public interests in the framework of limiting foreign presence in the areas of economic activity that are strategically important for the state. In 2022 - 2023 State policy in the field of foreign investment control is generally characterized by the introduction of additional restrictions in order to ensure national security: the list of areas of activity recognized as strategic has been expanded; the number of regulatory approvals required for obtaining by foreign persons for transactions with Russian companies has been increased; increased requirements for transparency in the ownership structure of strategic companies; the consequences of violation of the law in this area are detailed. Author formulates a conclusion about the necessary conditionality of the priority of public interest over private interest by current economic and political factors. First of all, proceeding from the measures necessary and sufficient to satisfy the public interest, the state determines the nature and degree of restriction of the economic freedom of the bearers of private interest. At the same time, by satisfying the public interest, which has as its goal the provision of national economic stability and security of the state, it ultimately ensures the satisfaction of such other interests and needs of an indefinite range of entities that are part of society and the state, which cannot be satisfied only in terms of the financial stability of the state, its military and economic security.

Changing Causal Narratives and Risk Perceptions on Foreign Investment: the Riskification of Chinese Investments in the Nordic Region

This article surveys recent legislative and policy changes on foreign investments in four Nordic countries (Finland, Sweden, Denmark and Norway). Until recently, only Finland had national legislation on foreign investments, although historically the Nordic countries were forerunners in introducing foreign investment controls. A general rethink in the USA and the European Union on the links between liberal economies, investment policies and security has occurred in recent years. This has cast investments by enterprises from major authoritarian countries, foremost China, in a different light. Rather than investment numbers as such, or realised risks related to Chinese investments, a ‘causal narrative’ has emerged in the Nordic countries that draws attention to the nature of the Chinese party-state and its’ unclear relationship to Chinese companies, underlining potential strategic motivations and security risks behind Chinese investments. Rapidly changing risk perceptions have driven legislative and policy changes on foreign direct investment (FDI), e.g. investment screening. Chinese investments have thus become riskified, to use a term coined by Olaf Corry. Shifting risk perceptions have similarly preceded previous ‘formative epochs’ in Nordic FDI legislation in the early twentieth century, after the Second World War and at the end of the Cold War. Each formative epoch has been characterised by a distinctive ‘risk profile’. We postulate that these shifting risk perceptions significantly shape the reception of FDI as a key channel of cross-border connectivity.

Sovereignty and Security: Constraints on Foreign Investment Control Arising from International Law

Sovereignty and Security: Constraints on Foreign Investment Control Arising from International Law

Between a Rock and a Hard Place Under China’s Anti-Sanction Law 2021: The Game- Theoretical Perspective

The Chinese Anti-Sanction Law (ASL 2021) has for the first time created a legal basis for sanctioning specific foreign entities for conduct inconsistent with China’s core interests and policies. Those involved in implementing foreign sanction measures can be put on an anti-sanctions list and may be denied entry into China or be expelled from the country. The escalated confrontations are part of a broader global trend of tightening export controls, sanctions and foreign investment controls on national security or public interest grounds. At the heart of the problem is the incongruity between the US and Chinese perspectives on distinct values such as human rights, national security and other public policies. The conflict of law arises inevitably as a multinational company (MNC) attempts to comply with both US law and ASL 2021. The law creates a legal conundrum for foreign MNCs, which are placed in a proverbial rock-and-hard-place situation. Using in-depth analyses of China’s evolving sanctions regime, it is essential to explore resolutions to mitigate the escalated tension and break the deadlock. It is therefore necessary for foreign entities to navigate a delicate balancing act between compliance with US laws and China’s requirements for continued transactions. Blocking Mechanism, Anti-Sanction Law, National Security, Entity List

Assessment of the influence of foreign investment on social and economic development of the country and the region based on the example of the Yaroslavl Region

Introduction. The process of foreign investment flow occurs in an independent world market of financial resources. Its operation depends on the national investment policies of governments, the political global balance, the macroeconomic indicators of different countries, and the investment environment. Within the investment process between host countries and economic agents willing to develop joint business operations with foreign partners, foreign investments may have a controversial influence on regional economies. The recipient state should pursue a sensible policy of foreign investment control, assess the positive and negative influence of foreign investments using macroeconomic indicators and various economic and mathematical models in order to apply the positive effects of foreign investments for the balanced and sustainable development of regions. Today five economic and mathematical models are used in the Russian Federation to assess the influence of foreign investments and they only assess the influence of direct foreign investments and are used solely at the federal level (calculations are not conducted at the level of the regions of the Russian Federation, and base values are not taken into account). The subject of the study is the system of relations in the Russian Federation and in the studied region (Yaroslavl Region) concerning the attraction of foreign investment. Purpose. The purpose of this work is to evaluate the influence of foreign investments on the economy of a host country using the analysis of economic and mathematical models and on the economy of the Yaroslavl Region in 2013 and 2018 using a modified multiplier-accelerator model. Methodology. General scientific research methods were used as the methodological basis for this work, including comparative, economic-statistical, and expert evaluation methods. In this work we systematised the base values in order to use the multiplier-accelerator model at the level of the regions of the Russian Federation. Conclusions. It was concluded that using the multiplier-accelerator model and taking into account the factor of direct foreign investment, it is possible to conduct minimal calculations to get a balance between domestic and direct foreign investment in order to accelerate the economic growth of the regions of the Russian Federation.

THE DEVELOPMENT OF NEGATIVE LIST REGULATION FOR FOREIGN INVESTMENT IN CHINA

The promotion of the negative list management model represents an innovative trend of the host state to further relax investment access as well as foreign investment control in order to promote transnational foreign direct investment flow. Since the relatively strict investment control system has existed for a long time, the negative list model is undoubtedly a major institutional and management innovation of opening-up. In the future, the negative list management model would be gradually adopted and promoted by contracting states with the conclusion of regional investment agreements, and become the representative achievement of high-level regional and even international investment rules. The involvement would also gradually transit from developed economies to developing economies. Negative list would become a necessary part in the formation and negotiation of international economic and trade rules in the future, and promotion of negative list will also become an important trend in the development of international investment rules.

National Security Review of Foreign Investments in Hungary

Abstract Screening mechanisms as investment policy measures keep gaining importance worldwide. In October 2018, the Hungarian Parliament also adopted rules on the national security review of foreign investments. This paper intends to present the newly introduced Hungarian screening mechanism which is applicable from 1st January 2019. The goal of this article is to determine how the established Hungarian FDI system can be typified, integrated into an existing regulatory model, or whether it carries elements of a multi-layered system, possibly providing a completely new approach to FDI. We conclude that Hungarian new rules on foreign investment control have become more transparent and coherent than in the past. Nonetheless the review process suffers from a number of shortcomings that may hinder the full accomplishment of the predictability and the effectiveness.

Foreign Investment Control Regime in Slovenia : One Step Over the Edge

After a relatively liberal period for foreign direct investment in the Republic of Slovenia, the enactment of the Act Determining the Intervention Measures to Mitigate and Remedy the Consequences of the COVID-19 Epidemic in May 2020 ushered in a significant change. It is not entirely clear why the government, while drafting the bill, decided to place the regulation of control over foreign direct investment under the intervention measures law, which addresses the consequences of the epidemic. A substantive analysis of the new arrangements for screening and controlling foreign direct investment reveals that the legislation was not carefully drafted. The definition of basic concepts and validity of the unique system for persons from the EU member states are already controversial. The Act is awkwardly drafted in terms of specifying a direct capital investment in the form of acquiring a share in a company with its registered office in the Republic of Slovenia. The conditions and procedure for revoking the consent authorising foreign direct investment are poorly regulated. Additionally, interpreting the Act to mean that the revocation of foreign direct investment can also be applied to foreign investments made before it came into force, that is, with a retroactive effect, is extremely controversial.

Trade Openness Effect on Provincial Economic Growth in Indonesia

This research aims to analyze the effect of openness on the economic growth of provinces in Indonesia. Using panel data from 2010 to 2017 in six provinces in Indonesia with investment and labor control variables, the results show that trade openness has an essential contribution to improving economic growth in Indonesia's provinces. The methodology of this study is use regression panel model. These results are following the concepts of theory and empiricism. However, because the degree of openness of provincial trade in Indonesia is still relatively low, the positive influence contributing to the domestic economy is also relatively low, from the control of foreign investment, FDI, and labor, which has a negative effect

Concretization or broader interpretation of the law? (New approaches to state regulation of foreign investment in strategic sectors of the economy)

The article explores the new approaches of the Federal Antimonopoly Service to the application of certain provisions of the law on the control of foreign investment in business entities of strategic importance.The question of the correlation of the concepts of “control” and “the possibility of blocking decisions” was examined, as well as the problems of legal uncertainty re mandatory preliminary approval of a transaction in which a foreign investor plans to purchase shares of a business entity that is related to the strategic type of activity.The authors concluded that it is necessary and advisable to classify a business company as strategic based on legislation by its implementation of a type of activity that is adjacent to strategic.

China's carbon dioxide emissions: An interprovincial comparative analysis of foreign capital and domestic capital

Against the background of China's further relaxation of foreign investment control and implementation of energy conservation and emissions reduction, the data of 30 provinces in China from 2001 to 2015 were used to measure the carbon dioxide emissions levels, foreign direct investment stock and domestic capital stock in various regions. The impulse response function, variance decomposition and panel causality test in the panel vector autoregressive model evaluated in detail the impact of foreign capital inflows, domestic capital inputs and economic growth on CO2 emissions in regions of different energy intensity. The study found that on the whole, foreign direct investment has no significant impact on China's carbon dioxide emissions. China's carbon dioxide emissions are mainly driven by domestic investment and economic growth; the sub-regional analysis, based on different energy intensities, shows that in areas of low energy intensity and medium energy intensity, foreign direct investment has a significant impact on CO2 emissions, and the contribution of foreign investment to CO2 emissions is between 12.2% and 14.1%. The panel causality test found that in the short term, foreign direct investment and domestic capital have significant predictive effects on carbon dioxide in various regions.

What influence domestic and overseas developers’ decisions?

PurposeForeign firms entering into the domestic real estate industry and foreign investment control are significant in global hot markets such as Australia. Despite their market impact and policy sensitivity, developer choice is rarely studied. The purpose of this paper is to study domestic and overseas property developers for their motive and preference in response to market growth and market barriers including regulatory constraint.Design/methodology/approachInternational trade theory suggests local and overseas firms can vary significantly for their risk profile when engaging in location-specific development opportunities. Using a comprehensive decision factor system for the residential development process, the authors conducted an experimental survey to collect the prime data to measure stated preference of domestic and overseas developers in the context of the Melbourne residential market.FindingsResults suggest high consistency between the samples of domestic and overseas developers. Possible explanations include vertical integration by innovative contracting, strict regulatory constraint dictates domestic and overseas firms’ preference or sample selection bias. This micro-analysis of developer stated preference highlights their entrepreneurial ability to combine substitution and integration for innovative contractual strategy. This ability to join asset holding and project management enables firm flexibility to mitigate business risk in rapidly globalising capital and factor markets.Practical implicationsThese insights of firm-level decision making contribute to the decision literature of real estate developers and are relevant to the broader literature of industrial economics and international trade. Government may evaluate policy strategies based on the explicit entrepreneur (e.g. developer) preference for their “comparative advantage”.Originality/valueThis paper highlights developer’s ability to jointly consider investment and project management for decision making. It found that other than political cost such as national interest and domestic interest group pressure, domestic and overseas developers in the Melbourne residential market actually think quite alike. It suggests that irrespective of property ownership conditions, market integration occurs in the Melbourne residential sector.

Structural Changes in the Relationship between Foreign Direct Investments and China’s Housing Price Bubble

Since 2006, China has issued a series of policies to regulate foreign investments (FI) in the attempt to control housing prices. In the present study, the association between foreign direct investments (FDI) and China’s housing price bubble (HPB) was examined to elucidate the rationality of foreign investment controls. Structural changes in the influence of FDI on China’s HPB were observed. FDI and China’s HPB exhibited an increased association between 1985 and 2015, particularly following Q3 of 1997. This may have resulted from the relative stability of the Renminbi during the Asian Financial Crises, which attracted an increased inflow of FDI to China, and consequently aggravated China’s HPB. A threshold regression model was employed to uncover the reasons for the structural changes exhibited in the influence of FDI on China’s HPB. Findings indicated that FDI only influenced China’s HPB during the Renminbi appreciation, and that increased FDI was not correlated to HPB during the Renminbi depreciation or when the value of Renminbi remained unchanged against the U.S. dollar. The empirical results obtained in the present study suggest that the Chinese government should first observe changes in the exchange market prior to controlling the housing market.

Foreign Investment Control Heats Up: A Global Survey of Existing Regimes and Potential Significant Changes on the Horizon

Mergers and acquisitions by multinational companies require attention to foreign investment controls around the world, and such controls vary widely. For example, the requirements for determining whether such controls apply, the areas/industries of focus, and the notification/review process differ by jurisdiction. In addition, potential significant changes to foreign investment controls are looming. Ultimately, information available in the various jurisdictions surveyed suggests that it is relatively rare for foreign investments to be blocked or abandoned due to foreign investment controls.

On Foreign Investment and Merger Controls: A Law and Geoeconomics View

The essay provides a brief overview of the transition that occurred in major legal systems from golden share to golden power provisions in order to protect national strategic interests in the economic field, with a focus on Italy. A closer look is then dedicated to a recent proposal for an EU regulation on foreign investment control. Final thoughts are developed in light of recent lines of social science research, pointing at the existence of geoeconomic contests in a context of economic wars.

Association between Securities and Real Estate Markets: The Case of Ho Chi Minh City

This study inspects the relationship between the securities market and real estate market in Vietnam, particularly the case of Ho Chi Minh City from Q1/2009 through Q3/2014. Using a comprehensive survey of expert opinions, we find that several macro factors including GDP, interest rate, inflation, fiscal policy, monetary policy, securities market regulations, international capital flows, and money market have effects on both the securities and real estate markets, which, in turn, do have mutual interactions. Furthermore, it is suggested by the survey results that among the determinants, policy on foreign investment control has the most powerful impact on capital movements between the two markets. The results of TECM analysis of property price index and VN-Index reveal a bidirectional causality between the two markets, which are positively related in the long run

El nacional liberalismo del economista peruano José Manuel Rodríguez, 1857-1936

El artículo busca contribuir a la reconstrucción del pensamiento económico latinoamericano, tan necesitado de una tradición propia en esta materia. José M. Rodríguez fue un economista peruano cuyo trabajo discurrió entre las últimas décadas del siglo xix y las primeras del xx. Fue funcionario público y escribió profusamente sobre la economía peruana de la época, proponiendo diagnósticos y soluciones a sus problemas. Identificó los defectos crónicos de la economía nacional y desarrolló ideas que, partiendo del liberalismo, evolucionaron hacia una doctrina que bautizamos como nacional-liberalismo, por su semejanza en algunos puntos con el nacional-socialismo europeo. Rodríguez propuso la protección de la industria nacional y el control de la inversión extranjera, apartándose de un liberalismo económico ortodoxo y simple.

The EU and Member States: FDI, Portfolio Investments, Golden Powers and SWFs

This chapter investigates the regulation of SWFs' investments in the EU and its Member States. The chapter starts with an overview of the latest multilateral initiatives concerning SWFs and national security-related concerns, namely the Santiago Principles and the OECD Guidelines for Recipient Countries Investment Policies relating to National Security of 2009. The aforementioned multilateral initiatives, also supported by the EU Commission, aim at avoiding national (over)reactions, and a downward spiral into protectionist. Furthermore the chapter emphasizes that the admission and establishment of foreign investments (direct investments of third countries' SWFs included) in the EU is primarily (but not exclusively) governed by the freedom of circulation of capital. This internal market freedom encompasses the fundamental principle of non-discrimination, which is also mentioned in the OECD Guidelines as a sound basis for national investment policies. Nevertheless, the aforementioned freedom is not absolute. Under the Treaty's rules it is subject to reservations and (possibly) Member States' derogations, when genuine public order and security reasons exist. In this respect, the chapter highlights that free circulation of capital and the case-law of the CJEU thereon gives Member States quite limited possibilities to lawfully resort to investment restrictions. That notwithstanding, some Member States (such as Germany and France) have tightened their foreign investment control procedures for public order and security reasons in recent times. The chapter argues that such national schemes are not in line with the principles developed by the CJEU in its case-law on the matter. Moreover, after the entry into force of the Lisbon Treaty the EU has acquired exclusive competence to legislate on the admission of FDI. The conclusion is drawn that a European harmonization is needed in order to address Member States' genuine public security concerns related to direct investments of third-countries' SWFs.

Investing in Italy: Key legal issues for investors in the Gulf

Recent market data and press reports seem to confirm a growing interest, including from the Gulf, for investments in private and listed companies in Italy. In taking advantage of the opportunities presented by the Italian market (including the disposal plans announced and in part already enacted by the Italian government), investors should be aware of some key legal issues and practical factors. This article briefly outlines some of these key legal issues and factors as they may apply to investors from the Gulf region. It first addresses some of the disclosure and mandatory tender offer obligations that may be triggered in connection with investments in companies listed in Italy. It then provides some legal and practical insights regarding shareholders' agreements, including certain related merger control considerations. It also provides a general overview of the new foreign investment control regime applicable to investments in the sectors of defense and national security, and in certain assets in the se...