Investment policy
Encyclopedia
An investment policy is any government regulation or law that encourages or discourages foreign investment in the local economy, e.g. currency exchange limits
Currency exchange
Currency exchange can refer to:* Bureau de change* Foreign exchange market...

.

Explanation

As globalization
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

 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
Tax, tariff and trade
The tax, tariff and trade laws of a political region, state or trade bloc determine which form of consumption and production tend to be encouraged or discouraged...

 regime, e.g. as defined by a free
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

 trade pact
Trade pact
A trade pact is a wide ranging tax, tariff and trade pact that often includes investment guarantees. The most common trade pacts are of the preferential and free trade types are concluded in order to reduce tariffs, quotas and other trade restrictions on items traded between the signatories.-By...

. 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
Anti-globalization movement
The anti-globalization movement, or counter-globalisation movement, is critical of the globalization of corporate capitalism. The movement is also commonly referred to as the global justice movement, alter-globalization movement, anti-globalist movement, anti-corporate globalization movement, or...

, is that guarantees are often available to foreign investors that are not available to local small investors, and that capital flight
Capital flight
Capital flight, in economics, occurs when assets and/or money rapidly flow out of a country, due to an economic event and that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic...

 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 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
Safe haven may refer to:* Safe harbor, a harbor or haven which provides safety from weather or attack, or an analogous situation* Safe Havens, a syndicated comic strip drawn by cartoonist Bill Holbrook...

 nation, e.g. Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

, 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
Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...

 by providing incentive for money-laundering and safe places for "bosses" to move to when the heat rises in their home country.

See also

  • Anti-globalization movement
    Anti-globalization movement
    The anti-globalization movement, or counter-globalisation movement, is critical of the globalization of corporate capitalism. The movement is also commonly referred to as the global justice movement, alter-globalization movement, anti-globalist movement, anti-corporate globalization movement, or...

  • Foreign direct investment
    Foreign direct investment
    Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...

  • Globalization
    Globalization
    Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

  • Immigration policy
    Immigration policy
    An immigration policy is any policy of a state that deals with the transit of persons across its borders into the country, but especially those that intend to work and to remain in the country. Immigration policies can range from allowing no migration at all to allowing most types of migration,...

  • Organized crime
    Organized crime
    Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...

  • Tax, tariff and trade
    Tax, tariff and trade
    The tax, tariff and trade laws of a political region, state or trade bloc determine which form of consumption and production tend to be encouraged or discouraged...

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