An investment policy is any government regulation or law that encourages or discourages foreign investment in the

local economy Local purchasing is a preference to buy locally produced goods and services rather than those produced farther away. It is very often abbreviated as a positive goal, "buy local" or "buy locally', that parallels the phrase "think globally, act loc ...

, e.g. currency exchange limits.

Explanation

globalization Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term ''globalization'' first appeared in the early 20t ...

integrates the economies of neighboring and of trading states, they are typically forced to trade off such rules as part of a common

tax, tariff and trade A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...

regime, e.g. as defined by a free

trade pact A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common tr ...

. Investment policy favoring local investors over global ones is typically discouraged in such pacts, and the idea of a separate investment policy rapidly becomes a fiction or fantasy, as real decisions reflect the real need for nations to compete for investment, even from their own local investors. A strong and central criticism of the new global rules, made by many in the

anti-globalization movement The anti-globalization movement or counter-globalization movement, is a social movement critical of economic globalization. The movement is also commonly referred to as the global justice movement, alter-globalization movement, anti-globalist m ...

, is that guarantees are often available to foreign investors that are not available to local small investors, and that

capital flight Capital flight, in economics, occurs when assets or money rapidly flow out of a country, due to an event of economic consequence or as the result of a political event such as regime change or economic globalization. Such events could be an increa ...

is encouraged by such free trade pacts.

Policy drivers

Investment policy in many nations is tied to immigration policy, either due to a desire to prevent

human capital flight Human capital flight is the emigration or immigration of individuals who have received advanced training at home. The net benefits of human capital flight for the receiving country are sometimes referred to as a "brain gain" whereas the net cost ...

by forcing investors to keep local assets in local investments, or by a desire to attract immigrants by offering passports in a

safe haven Safe haven may refer to: * Sanctuary Arts and entertainment * ''Safe Haven'' (novel), a 2010 American novel by Nicholas Sparks ** ''Safe Haven'' (film), a 2013 American film adapted from the novel * ''Safe Haven'' (short film), a 2009 American ...

nation, e.g.

Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...

, in exchange for a substantial investment in a business that will create jobs there. A frequent criticism of such joint immigration-investment policy is that they encourage

organized crime Organized crime (or organised crime) is a category of transnational, national, or local groupings of highly centralized enterprises run by criminals to engage in illegal activity, most commonly for profit. While organized crime is generally th ...

by providing incentive for

money-laundering Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions ...

and safe places for "bosses" to move to when the heat rises in their home country.

References

{{Authority control Economic integration Foreign direct investment Investment Political economy Economic policy

Explanation

Policy drivers

See also

References