ABSTRACT

In the hope of reducing unemployment, many countries have for some time now been making increasing attempts to attract foreign capital by making their location as attractive as possible. We may call this ‘competition among states for capital’.1 Since the appeal of a location depends to a significant degree on the economic conditions offered to foreign investors, this new paradigm has also increasingly led to a liberalization of the market for foreign direct investment (UN 1997, pp. 18-20). Regardless of this development, however, many governments continue to obstruct foreign entrepreneurs and hamper them in making direct investments in their home countries. It is this protectionist political option that forms the subject of the following discussion.