Washington. The vast majority of countries are missing out on lucrative investment opportunities by limiting foreign companies\u2019 access to their domestic markets, the World Bank said on Wednesday.
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\nNearly 90 per cent of the 87 countries surveyed have laws that bar foreign companies from some sectors of their economies, the World Bank found in its first-ever \u201cInvesting Across Borders\u201d report.
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\nEast Asian nations like China and Indonesia are among the most restrictive, while Eastern Europe and Central Asia have some of the most open economies.
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\nPierre Guislan, one of the report\u2019s main authors, argued there was a clear correlation between a country\u2019s openness and the level of foreign investment. Yet politics - security concerns or protectionist elements - typically force governments to adopt restrictions.
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\n\u201cFrom an economic point of view, it\u2019s pretty hard to argue that keeping out certain investors is going to benefit the country,\u201d Guislan said. But \u201cpolitical connotations\u201d meant there was often a \u201cwillingness to deal with the trade-off of potentially attracting less investment.\u201d
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\nThe report also found that smaller countries tended to be more open to investors from abroad. Larger markets like China \u201ccan afford to be less open yet attract significant foreign direct investment,\u201d Guislan said.
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\nSome other findings: It takes about 50 per cent longer on average for foreign investors to start a business than domestic groups; and about 20 per cent of countries require foreign investors to get government approval before launching their company or subsidiary.
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\nWhile this was the first report of its kind, Guislan said there was \u201canecdotal evidence\u201d that countries have relaxed regulations over time.
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\nMany countries were also looking to free up restrictions in light of the 2008 financial crisis, which sparked a sharp reduction in foreign investment.<\/p>\n
With the global economy now recovering, \u201ca number of countries are trying to position themselves better for what will be the next uptick\u201d in investment, Guislan said.<\/p>\n
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