Screening of direct foreign investments

Abstract

The article is devoted to a comprehensive study of the concept of "foreign direct investment screening" as a mechanism for controlling and verifying foreign direct investment with regard to its possible negative impact on the investment object and the national interests of the state in general. An obvious trend of recent decades in the field of foreign investment regulation is the introduction of state mechanisms for assessing their impact. Despite the generally positive effect of investment inflows into the economy, the acquisition of control over certain business entities by foreign states and investors may pose threats to the recipient country. That is why states are simultaneously trying to reduce the regulatory burden for foreign investors and introduce procedures for granting FDI permits, which in scientific sources and certain jurisdictions have acquired the term "foreign direct investment screening". Taking into account the work of foreign scholars, international organisations, analytical centres, and foreign legislation, the hypothesis of this study will be the statement that the effectiveness of FDI screening mechanisms depends on competent legal regulation of FDI permitting procedures, the powers of the responsible body, and the definition of verification criteria, which should be taken into account in the definition of the concept of "FDI screening" and for the development of this mecha­nism by legislators. Thus, the development of an interpretation of the meaning of the concept of "foreign direct investment screening" became the purpose of this study, to achieve which the genesis of introducing FDI screening was clarified and the purpose was determined, a comparative legal analysis of the legislative and doctrinal definitions of the concept of FDI screening was conducted, and the components of the FDI screening mechanism were formulated. On the basis of the identified components of FDI screening, an interpretation of the relevant term is proposed. The abovementioned has determined the structure of this study, and its substantiated conclusions were made possible thanks to the doctrinal analysis of publications by domestic and foreign scholars, content analysis of reports of international organisations, and a study of the Princeton University Politics and Regulation of Investment Screening Mechanisms (PRISM) dataset.