Starting a Foreign Investment across Sectors
The ease of starting a foreign investment in various sectors is a relevant consideration for investors seeking to establish an investment project abroad. Two thematic areas will be analyzed in this paper to answer the following questions: Which economies impose equity ownership restrictions on foreign investors and which procedural barriers do foreign companies face when establishing foreign-owned subsidiaries in these economies? The analysis is based on findings from the Foreign Direct Investment Regulations indicators, which measure 103 economies, on whether they restrict foreign ownership across economic sectors and on the establishment process they impose on foreign-owned companies. Nearly 80 percent of the economies covered in the Foreign Direct Investment Regulations database restrict foreign companies from entering in some sectors of their economies. In addition, establishing a foreign-owned company takes longer and requires more steps than starting a domestically-owned company in 94 percent of the economies observed. Overall, economies in Eastern Europe and Central Asia and high-income OECD economies have fewer equity restrictions on foreign ownership than economies in the other regions and require the least number of additional procedures of foreign companies to establish a subsidiary. The findings are significantly correlated with inflows of foreign direct investment on a per-capita basis.
Summary: | The ease of starting a foreign
investment in various sectors is a relevant consideration
for investors seeking to establish an investment project
abroad. Two thematic areas will be analyzed in this paper to
answer the following questions: Which economies impose
equity ownership restrictions on foreign investors and which
procedural barriers do foreign companies face when
establishing foreign-owned subsidiaries in these economies?
The analysis is based on findings from the Foreign Direct
Investment Regulations indicators, which measure 103
economies, on whether they restrict foreign ownership across
economic sectors and on the establishment process they
impose on foreign-owned companies. Nearly 80 percent of the
economies covered in the Foreign Direct Investment
Regulations database restrict foreign companies from
entering in some sectors of their economies. In addition,
establishing a foreign-owned company takes longer and
requires more steps than starting a domestically-owned
company in 94 percent of the economies observed. Overall,
economies in Eastern Europe and Central Asia and high-income
OECD economies have fewer equity restrictions on foreign
ownership than economies in the other regions and require
the least number of additional procedures of foreign
companies to establish a subsidiary. The findings are
significantly correlated with inflows of foreign direct
investment on a per-capita basis. |
---|