The document discusses the OECD FDI Regulatory Restrictiveness Index, which measures statutory restrictions on foreign direct investment across 22 economic sectors in OECD and non-OECD countries. It finds that restrictions vary significantly between countries and sectors, with restrictions generally higher in Asia-Pacific countries but declining over time as countries reform. Countries that reduce restrictions tend to see increases in foreign direct investment as a percentage of GDP. The index can be used to benchmark countries' restrictiveness, measure reforms, and assess the impact of FDI liberalization on inflows.

1. OECD FDI Regulatory Restrictiveness Index
A tool for benchmarking countries,
measuring reform and assessing
its impact

2. FDI Index: What does it measure?
Statutory restrictions: All discriminatory measures affecting foreign investors, covering
both market access and national treatment:
 Equity restrictions by sector or overall, for acquisitions or greenfield projects
 Screening above a threshold or foreign equity share
 Restrictions on key personnel: managers, directors, experts
 Operational restrictions: land ownership, profit/capital repatriation, branching,
reciprocity, discriminatory minimum capital requirements etc.
What is not covered?
 Degree of implementation/circumvention
 State monopoly or participation in a sector
 Special treatment accorded to a group of investors, whether by
activity (e.g. exporting) or country of origin
 Restrictions based purely on national security or prudential measures

3. 1. Agriculture
2. Forestry
3. Fishery
4. Mining & Quarrying (incl. oil extract.)
5. Manufacturing - Food & Other
6. Manufacturing - Oil Ref. & Chemicals
7. Manufacturing - Metals, Machinery
and Other Minerals
8. Manufacturing - Electric, Electronics
and Other Instruments
9. Manufacturing - Transport Equipment
10. Electricity (generation, distribution)
11. Construction
12. Distribution – Wholesale
13. Distribution - Retail
14. Transport (surface, water, air)
15. Hotels & restaurants
16. Media (broadcasting and other media)
17. Communication (fixed & mobile
telecoms)
18. Financial services - Banking
19. Financial services - Insurance
20. Financial services - Other financial
services
21. Business Services (accounting, legal,
architecture, engineering)
22. Real estate
22 sectors covered

4.  Scores built on experts’ assessment
of their importance
 Simple average of 22 sectors
 Equal weights advantage: simple,
flexible and easy to use
 Avoid the pitfall of variations in the
index across countries that are due
to the variations in the weights
used, rather than to the severity of
restrictions in place
RESTRICTIONS SCORES
I. Foreign equity limits
Start-ups and acquisitions
No foreign equity allowed 1
Foreign equity < 50% of total equity 0.5
Foreign equity > 50% but < 100% of total equity 0.25
Acquisitions
No foreign equity allowed 0.5
Foreign equity < 50% of total equity 0.25
Foreign equity > 50% but < 100% of total equity 0.125
II. Screening and approval*
Approval required for new FDI/acquisitions of < USD
100mn or if corresponding to < 50% of total equity*** 0.2
USD100mn or if corresponding to > 50% of total 0.1
Notification (pre or post) 0.025
III. Restrictions on foreign key personnel/directors
Foreign key personnel not permitted 0.1
Economic needs test for employing foreign key 0.05
Nationality requirements for board of directors
Majority must be nationals 0.075
At least one must be national 0.02
IV. Other restrictions
Establishment of branches not allowed/local 0.05
Reciprocity requirement 0.1
Restrictions on profit/capital repatriation 1.0 - 0.1
Access to local finance 0.05
Land ownership not permitted but leases possible 0.05 - 0.01
Minimum capital requirement 0.05
Local content requirements 0.1
Government procurement offers preference to locally-
owned firms 0.025
Scoring methodology

5. 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

6. FDI Restrictiveness Index, 2018
OECD average
NON-OECD average
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
Philippines
SaudiArabia
Indonesia
Russia
Malaysia
China
Jordan
NewZealand
India
LaoPDR
Mexico
Tunisia
Iceland
Canada
Australia
Korea
VietNam
Ukraine
Israel
Myanmar
Kazakhstan
Austria
Egypt
UnitedStates
Brazil
Norway
KyrgyzRepublic
Switzerland
Peru
Mongolia
Poland
Morocco
Turkey
Sweden
Chile
SouthAfrica
Cambodia
Japan
Italy
SlovakRepublic
Albania
CostaRica
France
Ireland
Serbia
Belgium
UnitedKingdom
Croatia
Denmark
Greece
Argentina
Hungary
BosniaandHerzegovina
Montenegro
Colombia
Germany
Macedonia,FYR
Spain
Latvia
Lithuania
Finland
Estonia
Netherlands
CzechRepublic
Romania
Slovenia
Portugal
Luxembourg
Kosovo*
OECD FDI Regulatory Restrictiveness,2018 (open=0; closed=1)

7. 0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
Agriculture&Forestry
Fisheries
Mining,Oil&Gas
Manufacturing
Electricity
Construction
Distribution
Transport
Hotels&restaurants
Media
Communications
Financialservices
Businessservices
Realestateinvestment
TotalFDIIndex
OECDFDIRegulatory Restrictivenessindex (open=0; closed=1)
OECD NON-OECD
FDI restrictions vary across sectors, 2018

8. Countries with fewer restrictions tend to receive more
FDI relative to the size of their economy
R² = 0.1911
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45
OECD FDI Regulatory Restrictiveness Index,2017 (open=0; closed=1)
Log of Inward FDI stock to GDP, 2016¹

9. Top reformers, 1997 to 2018
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
VietNam
Korea
China
India
Malaysia
Turkey
Indonesia
Finland
Philippines
Hungary
Australia
Belgium
Canada
Mexico
Poland
Slovenia
Egypt
Russia
Switzerland
Estonia
Austria
SouthAfrica
UnitedKingdom
Greece
Portugal
CzechRepublic
Brazil
Japan
Sweden
SlovakRepublic
OECDFDIRegulatory RestrictivenessIndex (open=0;closed=1)
2018 FDI RR Index Total 1997-2018FDI liberalisation

10. 0
5
10
15
20
25
30
35
0.0
0.1
0.1
0.2
0.2
0.3
0.3
0.4
Brazil
FDI Index (open=0; closed=1) % of GDP
0
2
4
6
8
10
12
14
16
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Korea
FDI Index (open=0; closed=1) % of GDP
0
10
20
30
40
50
60
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Viet Nam
FDI Index (open=0; closed=1) % of GDP
0
5
10
15
20
25
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Philippines
FDI Index (open=0; closed=1) % of GDP
OECD FDI RR Index (left axis) Foreign Direct Investment, inward stocks (% of GDP)
Investors tend to respond positively once a critical
mass of reforms has been achieved

11. Summary of key findings
• The level of FDI restrictiveness still varies greatly across countries,
and impinge essentially on primary and services sectors
• Restrictions are still relatively higher in Asia-Pacific, but are
coming down strongly over time
• Very little evidence of significant backtracking worldwide,
although some countries are strengthening national security
screening mechanisms
• Restrictions tend to hinder a country’s ability to compete for FDI,
and hence may impose a cost on the economy which must be
assessed against any potential gains from discriminatory policies
against foreign investors

12. Stephen Thomsen
Head, Investment Policy Reviews,
OECD Investment Division
stephen.thomsen@oecd.org
For further informationContact
FDI Regulatory Restrictiveness Index
www.oecd.org/investment/fdiindex.htm
Thank you