[zach417]

This debate is simply that of liberalizing or controlling a nation's capital account. There are benefits to both.

The benefit of liberalization (i.e. no limits on foreign investment) is that it can provide "a higher rate of return on people’s savings in industrial countries by increasing growth, employment opportunities, and living standards in developing countries." [1]

The benefit of controlling (i.e. limit foreign investment) is that it can reduce market volatility and risk. "International investors are willing to lend to them in good times but tend to pull back in bad times, thereby amplifying swings in the domestic macroeconomy." [1]

[1] - http://www.imf.org/external/pubs/ft/fandd/basics/capital.htm