Document Type



Foreign direct investment, henceforth denoted FDI, constitutes a basic component of the ongoing economic globalization. The latter phenomenon refers to the increasing economic interdependence of countries in the sense that today goods, services, capital and technologies are exchanged or diffused on a truly global market, accompanied by an unprecedented cross-border flow of human resources.

A large majority of states on every continent have been liberalizing or further liberalizing their investment policies and laws over the last decades. The substantial impact and role of international instruments and organizations on this progressive liberalization process has been stressed on both the global and international regional levels. The narrow interrelation between international investment and international trade, which both constitute key components of the ongoing economic globalization, has accelerated this trend towards more FDI hospitability, i.e., less legal and regulatory FDI barriers.

A country’s FDI framework can theoretically be divided into a certain number of legal components or determinants, both national as well as international. A thorough understanding of those elements facilitates the efficient analyzing of national law in this field. Moreover, those factors constitute as many criteria to measure and define the degree of openness and attractiveness of a country towards FDI inflows and to compare its legal and regulatory framework with that of other states. Understanding the interaction between those different determinants and determining how they can serve to define the specific system of a host economy and its degree of hospitality towards FDI in comparison with other states constitutes the main objective of this paper.

Date of Authorship for this Version

May 2006


Foreign investment