ABSTRACT
Government policy-making can be prone to univariate analysis. For example, a government may find that foreign investment flows are not at the expected levels and conclude that the 'solution' is to liberalize the country's foreign direct investment restrictions. The globalization of both production and consumption is based upon new economic realities that cannot be evaded in general, or with regard to foreign investment in particular. For a country to pursue a closed economy model has become increasingly expensive in terms of efficiency and innovation. Government regulation of the micro economy has led to regulation of foreign investment; conversely, deregulation of the micro economy has led to deregulation of foreign investment. Many countries have implemented a wide array of domestic policies - in response to certain national values, attitudes, and culture - that can impede foreign investment. In many countries, an extensive set of legal mechanisms are available to prevent hostile takeovers.
