The Relationship Between Business-Facilitating Legal Institutions and Foreign Direct Investment in The Arab Gulf States

Abstract

The Gulf Cooperation Council (GCC) countries have relied on oil as their main source of income since its discovery in the region. However, these countries have now entered a new era, one in which they must reduce their dependence on oil and diversify their economies. One strategy that features in the diversification plans and visions of all GCC countries is attracting foreign direct investment (FDI). In order to successfully attract FDI, a state must identify location advantages for multinational enterprises (MNEs). It is also important to investigate the determinants of FDI. The primary question that this study attempts to answer is whether business-facilitating legal institutions play a role in attracting FDI inflows to the GCC countries. I argue that the laws and regulations that facilitate business in the GCC states contribute to the amount of FDI inflows that these states receive. The dissertation also describes the international and domestic legal framework that governs FDI in the GCC countries and compares previous and current laws and regulations on FDI in those states. As far as the research methodology is concerned, I utilize both quantitative and qualitative techniques. For the quantitative analysis, I employ a time-series cross-sectional analysis to examine the dynamic relationship between changes in the explanatory variables and FDI inflows over the observation period. In the qualitative analysis, I draw on international investment agreements, laws, and regulations in order to compare and evaluate international and local FDI frameworks in the GCC countries.