ABSTRACT
The basic rationale behind conditional foreign equity ownership restrictions has been that the government has been willing to trade off the public costs of increased foreign equity ownership if the project generated additional public benefits for the country such as increased exports, location in remote regions, or employment creation. Screening organizations have had several basic functions. First, they have served to gather and monitor information concerning the amount and characteristics of foreign investment flowing into a country. Second, they could check the foreign investment projects to determine if they met the criteria set forth in government regulations concerning foreign investment. The screening and approval process can also become highly politicized as different government departments bargain with each other and with the foreign investor over the characteristics under which the foreign investment is to be permitted. A non-transparent, conditional, and discretionary screening process can greatly increase both the time required, and variations in the time required, for the approval process.
