The history of Australian foreign investment policy poses an explanatory challenge: why did a country long so open to overseas capital turn to more restrictive policy at the turn of the 1970s, only to significantly liberalise again from the mid-1980s through the early 1990s? Why has the regulatory apparatus of Australia’s Foreign Investment Review Board (FIRB) been little changed over the last four decades, despite this latter significant liberalising policy shift? To address these questions some political economy issues inherent to FDI are first considered, and then the central role of foreign capital in Australia’s historical development is discussed. The article subsequently explores the evolution of Australia’s foreign investment regime and the confluence of economic. attitudinal and political factors that shaped policy outcomes at key historical junctures, particularly in the period from the early 1970s to the early 1990s.