This policy paper presents key findings from the new OECD FDI Regulatory Restrictiveness Index (FDIRRI) series released in 2024, which now covers statutory restrictions on foreign direct investment (FDI) in more than 100 countries. The policy paper provides an overview of the updated FDIRRI framework and analyses the current state of statutory restrictions on FDI across countries, regions, policy areas and economic sectors as of end-December 2023. It also examines recent trends in FDI regulatory restrictiveness, with a focus on specific foreign investment rules that were either relaxed or tightened between 2018 and 2023.

This note describes the updated OECD FDI Regulatory Restrictiveness Index (FDIRRI) methodological framework, approved by the OECD Investment Committee in 2022 and which has been used to compute the new FDIRRI series released in 2024. First established in 2003, and last revised in 2022, the FDIRRI measures discriminatory restrictions on foreign direct investment (FDI) across countries and over time. It is a useful indicator for benchmarking market access and other statutory barriers to FDI and for monitoring and showcasing FDI policy reform efforts. As a policy-based indicator, the FDIRRI can also be used to empirically assess and simulate the potential impacts of FDI regulatory reforms. This note provides details on the revised FDIRRI methodology and highlights the main changes implemented in relation to the previous methodology.

Over the past two decades, governments worldwide have continued to liberalise restrictions on international investment with only occasional relapses. Yet, FDI liberalisation remains an unfinished agenda in various parts of the world and across sectors. This paper sheds light on their potential costs in terms of foregone investments. Applying an augmented gravity model, covering 60 advanced and emerging countries over the period 1997–2016, it estimates the elasticity of bilateral FDI positions and cross-border M&A activity to FDI restrictions as measured by the OECD FDI Regulatory Restrictiveness Index. Results suggest that reforms liberalising FDI restrictions by about 10% as measured by the Index could increase bilateral FDI in stocks by 2.1% on average. Effects are greater for FDI in the services sector, but even manufacturing sectors – which are typically open to FDI – are negatively affected by countries’ overall restrictiveness. Foreign equity limitations and FDI screening policies are also scrutinised.

The 2010 update of the FDI Restrictiveness Index (FDI Index) expands the sectors covered and revises the way in which FDI measures are scored and weighted. The FDI Index is now available for all OECD Members, adherents to the Declaration on International Investment and Multinational Enterprises, Enhanced Engagement countries and other G-20 countries. The FDI Index, originally developed in 2003, is jointly maintained by the OECD Investment Division and the OECD Economics Department as one component of the revised 2008 OECD Indicator of Product Market Regulation (PMR) from which the Going for Growth policy priorities are drawn. It is also used on a stand-alone basis to assess the restrictiveness of FDI policies in OECD Economic Surveys; reviews of candidates for accession; and OECD Investment Policy Reviews, including reviews of Enhanced Engagement countries, new adherents to the OECD Declaration on International Investment and Multinational Enterprises and of other non-OECD partner countries. The FDI Index has been used as a summary measure of OECD members’ positions under the OECD investment instruments in the Committee’s 2009 report updating countries’ reservations to the OECD Codes and exceptions to the OECD National Treatment instrument (NTI). The extension to all G-20 countries enables its use in the G-20 context.