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TOPIC:
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FDI AND INVESTMENT SCREENING POLICY
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ABSTRACT
Efforts to restrict Inward FDI (IFDI) have traditionally been modest. Recently there has been a dramatic increase in the number of countries screening IFDI. The costs imposed by screening raise concerns about the consequences for IFDI. In this paper, we leverage a structural gravity framework to quantify the effect of screening on the level of FDI in a host country, and on the distribution of IFDI across countries. We address these issues from three perspectives. First, partial equilibrium estimates suggest that screening reduces IFDI by 35%, on average. Second, general equilibrium estimates reveal that the unilateral adoption of screening reduces the aggregate IFDI of a new screener by, on average, 11%, but the impact varies from -3% to -23%. Finally, we consider a world where all non-screening hosts adopt screening. We find that IFDI is reduced on average by 13.4% for new screening hosts but this effect differs across hosts ranging from -3% to -29%. The impact on bilateral IFDI from the adoption of screening is even more varied, with the largest increase recorded as 6% while the largest drop is 64%. Third-country effects are also pronounced, with bilateral IFDI changes for bystanders ranging from -40% to 11%.
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PRESENTER
Laura Puzzello
Monash University
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RESEARCH FIELDS
International Economics
Applied Econometrics
Health Economics
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DATE:
11 January 2023 (Wednesday)
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TIME:
10am - 11.30am
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VENUE:
Meeting Room 5.1, Level 5
School of Economics
Singapore Management University
90 Stamford Road
Singapore 178903
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