Australia's foreign investment policy: an historical perspective

Why did Australia, historically open to overseas capital, turn to restrictive policy in the early 1970s, only to significantly liberalise again from the mid-1980s? Furthermore, why has the regulatory apparatus of Australia's Foreign Investment Review Board (FIRB), established in the illiberal mid-1970s, been little changed over the last four decades, despite a return to relative openness? The paper finds that the initial illiberal turn arose from the changing sectoral and country-of-origin mix of foreign investment, a less liberal domestic and international ideational climate FDI, and from oppositional policy entrepreneurship. Liberalisation followed growing external imbalances, elite neo-liberal ideational change and transformative public leadership. The FIRB mechanism placated populist economic nationalist sentiment while allowing liberal policy in general, yet also tailored to the public and private interest logics of specific investment proposals. Remaining sectoral restrictions reflect both private interest influences and sector-specific public interest sensitivities.