How is foreign investment managed in a command economy?

In a command economy, foreign investment is typically managed and controlled by the government. The government has the authority to determine the terms and conditions under which foreign investment can take place. This includes deciding which sectors or industries are open to foreign investment and setting regulations and restrictions on the amount of foreign ownership allowed.

The government may establish special economic zones or designated areas where foreign investment is encouraged and provided with certain incentives such as tax breaks or relaxed regulations. These zones are often created to attract foreign capital and technology, with the aim of promoting economic growth and development.

Foreign investors interested in investing in a command economy usually need to go through a rigorous approval process. They are required to submit detailed proposals outlining their investment plans, including the amount of capital they intend to invest, the nature of their business activities, and the potential benefits they can bring to the economy.

Once approved, foreign investors may face additional regulations and controls, such as restrictions on repatriating profits or transferring funds out of the country. The government may also impose conditions on technology transfer or require joint ventures with domestic companies to ensure technology and knowledge transfer to the local economy.

Overall, in a command economy, foreign investment is managed and regulated by the government to align with its economic goals and priorities. The government plays a significant role in determining the extent and nature of foreign investment, aiming to maximize the benefits for the domestic economy while maintaining control over key industries and resources.