Practitioner Comments on an “ISM Restrictiveness Index”

Abstract At a 2024 Law & Geoeconomics workshop Faubert & Bencivelli (2024) presented a paper ranking the restrictiveness of investment screening mechanisms ( ISM s), offering an important contribution to ISM analytical tools. This commentary argues the ranking could be improved in several ways. First, while the authors characterize the availability of mitigation measures as indicating less restrictiveness (because mitigation might enable approval of a deal that otherwise would be blocked), it seems mitigation measures more commonly burden transactions that would not be blocked if approval or blocking were the only choice. Second, the authors do not account for the extent to which ISM rules are monitored and enforced. The presence or absence of monitoring/enforcement mechanisms has a dramatic effect on ISM restrictiveness. Third, the authors do not consider the role of rule-of-law values, particularly transparency. The absence of transparency makes ISM s divergent from other administrative processes in democratic countries and interferes with the ability to assess the efficacy of ISM s.