The Ascendancy of National Security Imperatives in Foreign Direct Investment Regulation: A Neo-Mercantilist Resurgence in Strategic Sectors

Abstract This study investigates the escalating trend of national security-based foreign direct investment (FDI) restrictions in strategic sectors amidst rising economic nationalism. Examining the evolution of legal frameworks in the United States, the European Union (EU FDI Screening Regulation), the United Kingdom (National Security and Investment Act), and Australia, the research identifies technological competition, geopolitical rivalry, critical infrastructure concerns, and data/technological sovereignty as key drivers. Through a mixed-methods approach analyzing legal documents, case studies (e.g., Qualcomm/Broadcom, Nexperia/Newport Wafer Fab), industry reports, and international organization data, the study reveals potential reductions in FDI flows and increased investor uncertainty as economic consequences, alongside heightened geopolitical tensions. A comparative analysis highlights varying levels of intervention and regulatory stringency across jurisdictions. The findings highlight the growing tension between attracting FDI and safeguarding national security, necessitating clear, transparent, and internationally coordinated policy responses to balance economic openness with security imperatives in the context of increasing economic nationalism. Keywords: Foreign Direct Investment, Economic Nationalism, National Security, Strategic Sectors, Investment Restrictions, Geopolitics, Regulatory Frameworks. Citation: Azam, R. M. U. (2025). The ascendancy of national security imperatives in foreign direct investment regulation: A neo-mercantilist resurgence in strategic sectors. The Review of Law, International Politics and Economics, 1(1), [pp.61-79].