Competition Policy and Foreign Direct Investment

Marcus Noland

Japanese Economy, 1997, vol. 25, issue 5, 45-69

Abstract: It is difficult to identify a country that does not restrict inward foreign direct investment (FDI) in some way. This is usually accomplished through official prohibitions, restrictions, or official approvals processes, in which the government intervenes directly to affect the level, composition, or form of foreign investment. However, the behavior and practices of private parties, sometimes facilitated by government policies not directly aimed at foreign investment, may also affect the level, composition, and form of FDI. Often this takes the form of privately supported but publicly sanctioned barriers to entry. In some cases these may affect domestic and foreign potential entrants equally, though in other cases, foreign firms may face greater impediments. There is yet another set of circumstances in which government policies and private behavior may affect foreign firms' decisions to service the host market via exports or via local production, again affecting the level, composition, and form of FDI.

Date: 1997
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DOI: 10.2753/JES1097-203X250545

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