• Finally, not all profits of foreign multinationals need be repatriat to the home country. Some may be reinvest in the host country. To account for this phenomenon, and to allow for the effect that regulatory reform may have on both domestic and foreign direct investment more generally, the model makes provision for savings and capital accumulation. This is particularly important, since some regulatory barriers are aimed directly at limiting foreign equity participation. It is therefore important to capture how regulatory reform will affect not just foreign ownership shares, but also the total amount of productivity capacity available to an economy.