Effect of Regulation on Investment

In any given society rules and regulations helps to maintain order and ensure that people observe and subscribe to the law governing a particular phenomenon. In regard, investment world also has their own rules and regulations which guide investors in their respective investments. In the United States, there are specific regulations that are intended to govern both local and foreign investors in the country. However, some of these regulations tend to have an impact on the way individuals invest in the land and across the borders. Some of the regulatory policies instituted by the federal government to champion of homeownership may seem to disregard the vision of large investor intending to venture into real estate property investment. Bottom line, the regulations have both positive and negative impact in small scale and large scale investment.

Infringing regulations often hinders the level of competitiveness making new investment opportunities to shift to overseas countries that offers more local ground for investment. Also regulations causes uncertainty in the field of investment because of the constant review of the regulations. This therefore limits the longevity of the investors especially those looking to invest for a long time frame. In essence, investment may be stopped temporarily whenever there is uncertainty in terms of scope and the nature of the new rules and regulations. Regulations that seek to impose large startup costs and also licensing may make potential investors to shy away from investing due to high charges involved. Whenever the regulations are lessened and reduces, compliance rate tend to increase. Investments helps to create job opportunities to both US citizens and foreigners hence the need to be concerned on the development of regulations.

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The uncertainty lies more in the future regulations rather than the existing laws since investor are already aware of them. In case of future review in the regulations, the federal regulatory body ought to prepare the investors of the impending review o ensure they prepare and make necessary adjustments. The concerned authorities ought to ensure that they do not make regular reviews on the existing regulations especially on taxation rate and capital gains. Otherwise overseas markets may become more attractive especially of large investors who are much affected by the regulations. In the United States, the federal regulatory systems plays a key role in determining the number and the size of the investors. Regulations on right to property and infrastructure is considered to affect investors which makes the country risk losing investment opportunities which translates to job losses.