The impact of inward foreign direct investment bans on the configuration of global value chains
Abstract
Using a simple model, we analyse the effects on the global economy of unilaterally banning inward FDI (IFDI). Unilateral bans on IFDI may provoke retaliation from other countries (bilateral FDI ban), which further disrupts the global system. The most striking, unintended consequence of banning inward FDI revealed by our model is that in the scenario where both advanced and emerging countries impose bilateral inward FDI bans, the former gain little from banning inward FDI and bear the risk of losing much to the latter. This result is mainly driven by the prohibition on advanced country MNEs locating production activities of technology intensive products in emerging countries.
Fields of Study & Subjects
International Arbitration and Investment Law
International Business and FDI
Global trade
sustainability
and social impact
Publication details
- Journal / source
- International Business Review
- Publisher
- Elsevier BV
- Volume
- 35
- Issue
- 2
- Pages
- 102562–102562
- Publication date
- 17 January 2026
- Language
- EN