Ownership restraints on FDI are often put into place by a host country based on concerns of national security.
Why do governments restrict FDI?
Most of the time, governments aim to restrict or regulate foreign direct investment in order to safeguard domestic businesses and vital resources (such as oil, minerals, and other raw materials), preserve national and regional cultures, safeguard sections of their own populations, maintain political and economic independence, and manage or restrain economic growth.
What are the three potential costs of FDI to host countries?
There are three FDI expenses that affect host nations. They develop as a result of potential negative impacts on domestic competition, negative consequences on the balance of payments, and the perceived loss of national sovereignty and autonomy.
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