OECD FDI Regulatory Restrictiveness Index

A tool for benchmarking countries, measuring reform and assessing its impact
Stephen Thomsen
Senior Economist Investment Division, OECD

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

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

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, Egypt, Latvia, Lithuania, Morocco, Peru, Romania

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

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

How can the FDI Index be used?

To measure: relative FDI restrictiveness of each country changes in restrictiveness over time

a countrys performance in attracting FDI for a given level of restrictiveness

the effect of FDI liberalisation on FDI inflows

0.15

0.10

0.05 0.45

0.00 0.40 0.30 0.50

0.35

0.20

0.25

ICELAND CHINA SAUDI ARABIA INDONESIA INDIA JAPAN NEW ZEALAND MEXICO RUSSIA CANADA KOREA AUSTRALIA ISRAEL UKRAINE POLAND PERU AUSTRIA UNITED STATES SWITZERLAND BRAZIL TURKEY NORWAY DENMARK CHILE MOROCCO LATVIA EGYPT UNITED KINGDOM IRELAND SWEDEN CZECH REPUBLIC SOUTH AFRICA ITALY HUNGARY SLOVAKIA FRANCE LITHUANIA BELGIUM GREECE COLOMBIA FINLAND ARGENTINA GERMANY ESTONIA SPAIN NETHERLANDS ROMANIA SLOVENIA PORTUGAL LUXEMBOURG

Source: OECD

Closed = 1; Open = 0

Non-OECD average

FDI regulatory restrictiveness, 2010

OECD average

0.400

0.600

0.200 0.500

0.000
0.300 0.700 0.100 CHINA KOREA INDONESIA INDIA ICELAND RUSSIA MEXICO TURKEY JAPAN AUSTRALIA CANADA NEW POLAND FINLAND AUSTRIA SWITZERLA HUNGARY BELGIUM EGYPT ISRAEL BRAZIL SOUTH SLOVENIA NORWAY CZECH REP. US UK SWEDEN DENMARK CHILE ESTONIA IRELAND SLOVAK REP. GREECE ITALY FRANCE PORTUGAL SPAIN GERMANY NETHERLAN ARGENTINA LUXEMBOU 2010

FDI liberalisation in selected countries

Source: OECD 1 = closed; 0 = open

1997

1997-2010

FDI liberalisation in Indonesia, 1985-2009*

60

Cumulative FDI inflows since 1980 (USD billion; left axis)

OECD FDI Restrictiveness Index score (0=open; 1=closed; right axis)

1.0 0.9 0.8 0.7 0.6

50

40

30

0.5 0.4

20

0.3 0.2 0.1

10

0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 *The historical series is based on a simplified index and hence the score for 2009 does not correspond to the overall Index score.

0.0

FDI performance vs. Openness

1.2 1.0

Inward FDI Stock /GDP

0.8

0.6

0.4

0.2 R = 0.14 0.0 0.00

0.05

0.10

0.15

0.20 0.25 0.30 FDI Index (0=open; 1=closed)

0.35

0.40

0.45

Source: OECD

Find out more about the FDI Index

For information on the methodology:
Blanka Kalinova, Angel Palerm, Stephen Thomsen (2010) OECDs FDI Restrictiveness Index: 2010 Update, OECD Working Papers on International Investment No. 2010/3 www.oecd.org/daf/investment/workingpapers

For the latest data for 50 countries:

www.oecd.org/investment/index