What kinds of policy instruments exist for governments to use and influence FDI?
Policies for host country.
- Encouraging inward FDI
By using incentives to foreign firms. The motivation is to gain resource transfer effects and employment effects.
- Restricting inward FDI
By applying ownership restraints and performance requirements.
Policies for home country.
- Encouraging outward FDI
Government-backed insurance programs, special funds and banks and relaxed restrictions.
- Restricting outward FDI
By limiting capital to maintain a safe balance of payment. Use of manipulated tax rules and prohibit national firms from FDI due to political reasons.
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Foreign Direct Investment
- What are the implications for managers of the theory and government policies associated with FDI?
- What are the benefits and costs of FDI to home and host country?
- How does political ideology shape a government's attitudes toward FDI?
- What are the different theories of FDI? Why is it a good idea?
- What are the current trends regarding FDI in the world economy?