A double-edged attitude towards FDI is on the rise nowadays in many parts of the world. As a matter of principle, most states still encourage FDI, but at the same time many are increasingly beginning to adopt a more selective approach to it. This means that FDI is welcomed as a general rule, but some FDI or some kinds of FDI are not that welcome in certain cases or in relation to particular targets. National security, national essential security interests and similar terms are some of the grounds used to protect the host state from undesired FDI.

All this begs the question of what foreign investment can be dangerous for the state, in other words, against ‘what’ or against ‘whom’ is protection sought. Answering this question is done by each state on its own. Certain common criteria are broadly used to determine whether the investment is harmful. Whether an FDI proposal is to be potentially contrary to national security, and thus subject to a national security evaluation before it gets clearance, depends on several factors: mainly, but not exclusively, the origin of the investment, the potential participation of foreign states in the FDI project, the object of the origin at which it is aimed, and the amount of the investment.

Any of these four factors, alone or in combination, activate in most cases the national system to evaluate FDI on national security or related grounds. These different factors are also given uneven weight in the various national screening systems, and of course their assessment can be affected by external factors as well as stereotypes and prejudices. FDI may generate different concerns depending on whether it relates to energy from nuclear power or from solar power, or whether the investment is proposed by a Canadian corporation or a Russian one. Even when the investor is state controlled, the investor will be perceived differently depending on its origin (for example, a Norwegian sovereign wealth fund (SWF) or a Chinese one) and the place or economic sector where the investment is to be made.

The origin of the investment and the quality of the investor are relevant in assessing whether the investment will conflict with national security.