Wed 13-04-2022 22:07 PM
ABU DHABI, 13th April, 2022 (WAM) — In line with its continuous efforts to support the decision-making process in the Arab countries, the Arab Monetary Fund (AMF) has released a study titled “The Role of Economic Freedom, Governance, and Business Environment in Attracting Foreign Direct Investment to the Arab Region”.
As a result of competition in the global environment for foreign direct investment, Arab countries, like other countries, have had a challenging time attracting foreign direct investment into the region. Therefore, this study, aims to assess the role of economic freedom indices and governance indicators in attracting foreign direct investment into the Arab region.
The study reveals that economic freedom indices like the monetary and the financial freedom indices are significantly and positively related to foreign direct investment attractiveness in the Arab region. Additionally, the study found that the regulatory quality index outperforms all other governance factors in attracting foreign direct investment inflows into the Arab region.
The results of this study have policy implications for policymakers in the Arab region. To foster foreign direct investment inflows into these countries, policymakers should ensure a high level of economic freedom, the effectiveness of their governance systems, the quality of their institutions, and the stability of their business environment by strengthening and reforming relevant laws and regulations, lowering the barriers to business entry, limiting risks, and improving cooperation policies.