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Investment Screening Mechanisms: The Trend to Control Inward Foreign Investment

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  • Vera Z. Eichenauer
  • Michael Dorsc
  • Feicheng Wang

Abstract

In an increasing number of sectors, concerns are rising that foreign firm participation may pose risks to public order. Many developed countries have adopted or extended their investment screening mechanisms to control inward foreign direct investment in strategically important sectors over the last years. This policy brief documents the development of investment screening in OECD and EU countries and provides the first discussion from an economic perspective. We review existing and propose new explanations for the adoption of investment screening. Our exploratory quantitative analysis suggests that countries with higher levels of technological development and with a stricter regulatory environment for foreign investment are more likely to introduce investment screening. Contrary to the popular wisdom, we do not find evidence that higher Chinese inward investments are associated with the implementation of investment screening.

Suggested Citation

  • Vera Z. Eichenauer & Michael Dorsc & Feicheng Wang, 2021. "Investment Screening Mechanisms: The Trend to Control Inward Foreign Investment," EconPol Policy Reports 34, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpr:_34
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    References listed on IDEAS

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    1. Pawj, 2020. "Table of Contents," Professional Agricultural Workers Journal (PAWJ), Professional Agricultural Workers Conference, vol. 6(3), January.
    2. I. Serdar Dinc & Isil Erel, 2013. "Economic Nationalism in Mergers and Acquisitions," Journal of Finance, American Finance Association, vol. 68(6), pages 2471-2514, December.
    3. Ejis, 2020. "Table of Contents," European Journal of Interdisciplinary Studies, Bucharest Economic Academy, issue 01, March.
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    Cited by:

    1. Eichenauer, Vera & Wang, Feicheng, 2024. "Mild deglobalization: Foreign investment screening and cross-border investment," Kiel Working Papers 2265, Kiel Institute for the World Economy (IfW Kiel).
    2. Eichenauer, Vera & Köppl, Stefan & Köppl-Turyna, Monika, 2024. "Investment screening and venture capital," Research Papers 30, EcoAustria – Institute for Economic Research.
    3. Michael Dorsch & Vera Eichenauer & Renaud Bourlès, 2023. "The adoption and diffusion of international economic policy: The case of foreign investment screening," French Stata Users' Group Meetings 2023 19, Stata Users Group.
    4. Vera Z. Eichenauer & Feicheng Wang, 2024. "Mild Deglobalization: Foreign Investment Screening and Cross-Border Investment," CESifo Working Paper Series 11538, CESifo.

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