A proposal from the European Commission has been put forward to establish a new framework for screening FDI into the EU. The main arguments for FDI screening relate to security and public order, and screening procedures are typically applied to investments in strategic sectors or assets and investments by state-owned enterprises.
Increased FDI screening is likely to have negative consequences in terms of 1) the administrative resources required to conduct the screening, 2) increased compliance costs, uncertainty and delays experienced by the acquiring firms, and 3) risk of lower FDI inflows and reduced access to capital for domestic firms.
The Danish Business Authority has asked Copenhagen Economics to map global FDI flows into the EU and to assess the potential consequences of FDI screening. The study builds on a unique database on FDI flows into individual EU Member States during 2003-2016. The database tracks FDI deals by sector and type of investor, which allows us to identify potentially sensitive deals. The study also builds on case studies of screening procedures in Finland and Germany.
The main conclusions of our study are:
The study is commissioned by the Danish Business AuthorityDownload