To foster foreign direct investment (FDI) in Arab countries, policymakers should ensure a high level of economic freedom, the effectiveness of the governance systems and the quality of institutions, the Arab Monetary Fund (AMF) said in its fresh study.
The study also called for ensuring the stability of the business environment by strengthening and reforming relevant laws and regulations, lowering the barriers to business entry, limiting risks, and improving cooperation policies.
The study titled “The Role of Economic Freedom, Governance, and Business Environment in Attracting Foreign Direct Investment to the Arab Region”, assesses the role of economic freedom indices and governance indicators in attracting FDI 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 FDI attractiveness. Additionally, the study found that the regulatory quality index outperforms all other governance factors in attracting investment.
