The measures that would be suggested to improve the environment for foreign investment are as follows:
1. Capital Controls: Capital controls encourage black markets for foreign currency.
So, it should be
a
effective
controls
system
for
improvement of
foreign investments.
2. Allows a limited capital flight: Another strategy that governments can use to
limit capital flight is to make holding domestic currency more attractive
by keeping it undervalued relative to other currencies or by keeping local interest rates high.
3. Tackle tax havens and address tax evasion: Tax evasion can be reduced by
relying more
on
consumption
or
sales taxes and less on taxes on interest and profits.
4. Arrangements among control bodies: Agreements
among countries and central
banks can add
to
the credibility of
these situations.
5. Reforms in international monitory system: It ensures stability of exchange rates, and
must build
upon the principles of cooperation and
solidarity.
6. Private
capital: One encouraging sign is that private capital has begun to return
to
countries for which future prospects have brightened.
7. Reform accounting
standards: It
must be improved in order
to prevent
excessive risk taking as well as tax avoidance and tax evasion practices.