The Economics Determinants of Foreign Direct Investment Inflow in Iraq for the Period (2004-2011)

Abstract

The impact of economic variables on the growth of FDI inward is always of interest to economists, financial, academics and decision-makers nowadays, was discussed this issue extensively in recent years, but the results were different and unclear, so the main objective of this study is to analyze the impact of three macroeconomic variables; inflation rate, interest rate and exchange rate of the Iraqi dinar against the U.S. dollar on the foreign direct investment inflows to Iraq for a period of eight years (2004-2011) using statistical analysis and econometrics as multiple regression. The study results showed that there was no significant effect of both the inflation rate and the interest rate, and the existence of significant negative effect of the exchange rate on the dependent variable foreign direct investment inwards in Iraq. The study concluded that the increase in the exchange rate of the Iraqi currency leads to lower FDI inwards. The study suggested that the Iraqi government focus to establish effective monetary policy in order to stable the exchange rate to attract more foreign direct investment to participate in the economic development and reconstruction process to be undertaken.