The sequel to the book on inward FDI policy focuses on the policy aimed at reducing, avoiding or preventing costs and downsides of FDI, generated mainly or only by foreign affiliates of MNEs in host countries. The book includes comprehensive analysis of policy types, their causes and effects in national and international contexts.FDI downsides include, firstly, costs that host countries incur by their own choice as the price for expected benefits, such as expenses on FDI incentives and on the activity of investment promotion agencies, examined in the first book. Secondly, there are costs associated with unique characteristics of MNEs that relate to reducing the tax base and tax revenues of host countries and transfer of profits abroad. The latter can be reduced by encouraging reinvestment of profits. Thirdly, there are negative effects of foreign affiliates already present in the host country, which are like those generated by domestic enterprises, e.g., breaking labor laws or polluting the environment. These do not fall within FDI policy, because they are dealt with by domestic policies aimed at all enterprises (competition policy, environmental or labor legislation). In general, the identification and evaluation of FDI downsides is not always clear. In the academic literature it often depends on whether counterfactual situations are considered or not. In addition, FDI impacts tend to be evaluated against expectations, not always realistic, and the absence of expected benefits is considered as a downside.A typical cost generated only or mainly by MNEs is eroding the tax base and thus tax revenues of host countries, initially by classic transfer pricing, and, in globalization, increasingly, by aggressive tax planning of MNEs. The origins of today’s problems with MNEs’ taxes can be traced to the old system, established before World War Two, based on bilateral double taxation treaties (DTTs), aimed at avoiding double taxation rather than preventing the avoidance of paying taxes. The system has become incompatible with tax avoiding practices, which proliferated in globalization, due, among others, to the emergence of Global Value Chains and digital MNEs, making it difficult to establish where profits are generated. Or in short, where are Google’s factories. The expansion of tax heavens, offshore financial centers and national legislations, allowing special purpose entities, have facilitated harmful tax practices to the detriment of the increasing number of host countries, not only with the highest, but also average and modest corporate tax rates. Estimates of lost taxes go into billions of dollars every year.Countries are not entirely defenseless in face of tax avoidance. They deal with it through national policies (which are discussed in detail, including their effectiveness) and, gradually more frequently, through international cooperation, which is essential for policy effectiveness. International initiatives, especially by the OECD, include, among others, joint actions against tax heavens, the establishment of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and, most importantly, launching international negotiations aimed at defining new standards allowing the elimination or at least the reduction of Base Erosion and Profit Shifting (BEPS) practices of MNEs. The book reviews agreed and non-agreed standards and instruments of the BEPS program (as of the end of 2016). While progress on some issues and instruments has been achieved, few standards have been agreed for the digital economy.The second part of the book concerns policies of setting bounds for the participation of foreign capital in national economies. Although attracting FDI and benefitting from it have become the dominating type of FDI policy, no country is fully open to FDI. Bounds to entry and activities of foreign firms are often set subjectively, reflecting not only economic, but also political, cultural and psychological factors. Consequently, countries restrain or avoid FDI projects perceived as not beneficial or not desirable. Few restrictions concern inflows of greenfield FDI. They are more frequent as regards FDI via takeovers of domestic enterprises, where countries, including developed ones, use a variety of instruments, including regulatory restrictions, ad hoc interventions in individual transactions (these are reviewed in the EU countries) or state-owned enterprises in “strategic” industries. In the 21st century several key developed and emerging countries, including the United States, have increased controls of foreign entry, motivated by national security considerations, though definitions of what is important for security vary. Legislation of the European Union, motivated by principles of free capital movement, entrepreneurship freedom and freedom to supply services, regulates and restricts the scope of individual states’ intervention in international takeovers of domestic firms. Based on competition rules, the control and supervision of the largest mergers and takeovers falls within the sole competence of the EU.Cases studies of the United Kingdom, France and Canada throw additional light on national flavors and causes and consequences of restraining FDI via M&As. Three countries do not differ much as regards openness to greenfield FDI, especially in manufacturing. As regards FDI via takeovers, the UK represents exceptional openness, while France is characterized by a high degree of state interventionism. Canada is a special case, because it has retained the system of screening all FDI projects above certain value. Differences in policy are reflected in the size of inward FDI. It is not surprising that, in value, liberal UK attracted almost five times more FDI via M&As than restrictive France. Interestingly, it also attracted three times more of the value of greenfield investments. The case of “repolonization” of banks in Poland illustrates the policy of backtracking on the bounds for foreign capital.Poland’s situation regarding the considered issues is examined at the end of the book. However, most of the book concerns FDI policy in the world