COVID-19 regulatory responses and FDI in the United States: trends and implications for capital flows

Investment regulations implemented by the US government as part of the response to COVID-19 have implications for capital flows. The objective of this paper is to analyse how these regulations affect FDI flows, the potential long-term consequences for the United States and developing economies. We use secondary data to chart trends and simple descriptive and analytic framework to synthesise arguments and perspectives. The effects of COVID-19 related restrictions on FDI in the U.S. run through the invocation of the Defense Production Act. Our analysis indicates that these restrictions are highly concentrated on investments that fall under the regulations of Committee on Foreign Investment in the United States, which has increasingly become active in restricting investments flows. While this bodes ill for FDI inflows into the U.S and global development prospects, it is also an opportunity for developing countries to reform and refocus on FDI flows from emerging economies.