OECD FDI Regulatory Restrictiveness Index

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The OECD’s FDI Regulatory Restrictiveness Index (FDI Index) measures statutory restrictions on foreign direct investment in 58 countries, including all OECD and G20 countries, and covers 22 sectors. This presentation by Stephen Thomsen describes the methodology used to calculate the FDI Index and how it is used as a tool for benchmarking countries, measuring reform and assessing its impact.

Read more at: http://www.oecd.org/investment/fdiindex.htm

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OECD FDI Regulatory Restrictiveness Index

  1. 1. OECD FDI Regulatory Restrictiveness Index A tool for benchmarking countries, measuring reform and assessing its impact Stephen Thomsen Senior Economist Investment Division, OECD
  2. 2. FDI Index: What does it measure? Statutory restrictions  All discriminatory measures affecting foreign investors, including market access restrictions and departures from national treatment What is not covered?  Degree of implementation  Institutional quality
  3. 3. FDI Index: Methodology Four types of restrictions  Sectoral equity limits  Screening  Restrictions on key personnel: managers, directors  Other restrictions: land, reciprocity, capital repatriation, branches, etc. Weighting  Each restriction given a score based on an assessment of its importance.  Aggregate score is weighted average of sectoral scores
  4. 4. FDI Index: data & coverage  OECD countries: information based on reservations under the OECD Code of Liberalisation of Capital Movements and the National Treatment Instrument  Countries adhering to the OECD Declaration on International Investment and Multinational Enterprises • Argentina, Brazil, Colombia, Egypt, Latvia, Lithuania, Morocco, Peru, Romania, Tunisia • Other countries currently requesting adherence  Other non-OECD countries (China, India, Indonesia, Russia, Saudi Arabia, South Africa, Ukraine), based on OECD Investment Policy Reviews, national sources, GATS and other international agreements, APEC
  5. 5. Sectors  Agriculture, forestry, fishing  Mining & quarrying  Manufacturing (5 sub-sectors)  Electricity (generation, distribution)  Construction  Distribution (wholesale, retail)  Transport (surface, water, air)  Hotels & restaurants  Information & communication (fixed & mobile telecoms, broadcasting, other media)  Financial services (banking, insurance, other finance)  Professional services (accounting & auditing, legal, architecture, engineering)  Real estate
  6. 6. How can the FDI Index be used? To measure:  relative FDI restrictiveness of each country  changes in restrictiveness over time  a country’s performance in attracting FDI for a given level of restrictiveness  the effect of FDI liberalisation on FDI inflows
  7. 7. OECD FDI Regulatory Restrictiveness Index, 2014
  8. 8. FDI liberalisation in selected countries 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 1997 2014 (Open = 0; closed = 1) As of December 2014
  9. 9. FDI liberalisation in Indonesia, 1985-2009* 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 10 20 30 40 50 60 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Cumulative FDI inflows since 1980 (USD billion; left axis) OECD FDI Restrictiveness Index score (0=open; 1=closed; right axis) *The historical series is based on a simplified index and hence the score for 2009 does not correspond to the overall Index score.
  10. 10. FDI performance vs. Openness 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 0.000 0.050 0.100 0.150 0.200 0.250 0.300 0.350 0.400 0.450 2013InwardFDIStocks(%ofGDP) 2014 FDI RR Index (Closed = 1; Open = 0) Sources: OECD and IMF statistics. Obs.: excludes Belgium, Luxembourg and Ireland.
  11. 11. Find out more about the FDI Index For information on the methodology: Blanka Kalinova, Angel Palerm, Stephen Thomsen (2010) “OECD’s FDI Restrictiveness Index: 2010 Update”, OECD Working Papers on International Investment No. 2010/3 http://dx.doi.org/10.1787/5km91p02zj7g-en For the latest data: www.oecd.org/investment/fdiindex.htm
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