An Analytical Study of Foreign Direct Investment in the Gulf Cooperation Council (GCC)

Abstract

The aim of this paper is to identify the critical determinants in the Gulf Cooperation Council (which will be referred to as GCC) for Foreign Direct Investment (FDI) inflows. Using the understanding of financial econometrics, the study discusses a significant positive association between FDI in Non-oil industries, while on the contrary, the negative association with the Oil industries. Natural resources are a path for some countries to attract FDI. Still, it does not achieve the main benefits of FDI, which are the introduction of new technology and the offering of job opportunities. Existing literature argues the suggestion that resource-rich countries attract less FDI because of resource (oil) price volatility. Statistical Models in Economics are used to analyze the data to achieve a conclusion. This study examines that natural resources discourage FDI in GCC countries, and helps identify policy reform priorities to support diversification and growth in the GCC through foreign investment.