oecd fdi regulatory restrictiveness index · top down –perceptions bottom up –hard data...

OECD FDI Regulatory

Restrictiveness Index

Stephen Thomsen, Investment Division, OECD

OECD Conference Centre

Paris, France

2

What gets measured gets done

Indicators are proliferating:

World Bank, United Nations, OECD

Transparency International, IMD, WEF

Approaches vary:

Top down – perceptions

Bottom up – hard data

Governments are paying attention:

Help to prioritise reforms

Create momentum for reform

Evaluate progress

3

OECD Indicators in various

policy areas

Product market regulation

State control, barriers to entrepreneurship,

barriers to trade and FDI

Labour market policies

Employment protection legislation

Educational attainment and achievement (PISA)

4

OECD’s Going for Growth:

Indicator-based monitoring

5

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

6

FDI Index: Methodology

Four types of restrictions

Sectoral equity limits

Screening

Restrictions on key personnel: managers, board

Other restrictions: land, reciprocity, capital

repatriation, branches

Weighting

Each restriction given a score based on an

assessment of its importance.

Each sector is then assigned a weight to derive an

aggregate figure

7

Current revisions to FDI Index

Greater focus on FDI (mode 3)

No public ownership

More transparent sectoral weighting

Simplification of equity restrictions

More sectors

Updated & expanded to new countries

8

FDI Index: data & coverage

30 OECD countries: information based on reservations under

the OECD Code of Liberalisation of Capital Movements and the

National Treatment Instrument

12 countries adhering to the OECD Declaration on International

Investment (NTI).

• Argentina, Brazil, Chile, Peru

• Egypt, Israel, Morocco

• Estonia, Latvia, Lithuania, Romania, Slovenia

Other non-OECD countries (China, India, Indonesia, Russia,

Saudi Arabia, South Africa ), based on national sources, GATS

and other international agreements, APEC

9

Sectors

Agriculture, forestry, fishing

Mining & quarrying

Manufacturing (8 sub-sectors)

Electricity (generation, distribution)

Construction

Distribution (wholesale , retail)

Transport (surface, water, air)

Hotels & restaurants

Information & communication (fixed & mobile telecoms,

broadcasting, other)

Financial services (banking, insurance, other)

Real estate

Professional services (accounting, legal, architecture,

engineering)

Other services (incl. health, education)

10

FDI regulatory restrictiveness, 2006

(currently being updated & revised)

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

0.450

0.500

Latv

ia

Germ

any

Neth

erlands

Slo

vak R

epublic

United K

ingdom

Austr

ia

Irela

nd

Italy

Sw

eden

Hungary

Fra

nce

Czech R

epublic

Gre

ece

Lithuania

Pola

nd

Belg

ium

Turk

ey

Denm

ark

Spain

Arg

entina

Port

ugal

United S

tate

s

Kore

a

Peru

Esto

nia

Isra

el

Sw

itzerlan

d

Slo

venia

Japan

Norw

ay

Rom

ania

New

Zeala

nd

Chile

Fin

land

Austr

alia

Egyp

t

South

Afr

ica

Ind

on

esia

Bra

zil

Mexic

o

Russia

Canada

Chin

a

Icela

nd

India

Other restrictions

Screening

Equity

11

Regulatory restrictiveness by industry,

OECD and non-OECD average

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

OECD Average Non-OECD Average

12

How can the FDI Index by 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

13

Thank You

stephen.thomsen@oecd.org

www.oecd.org/investment