Policymakers need to 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 in order to foster foreign direct investment inflows into these countries, according to a recent study by the Arab Monetary Fund (AMF).
The AMF released its study titled The Role of Economic Freedom, Governance, and Business Environment in Attracting Foreign Direct Investment to the Arab Region as part of its continuous efforts to support the decision-making process in the region.
The study calls for policymakers in the Arab region to strengthen and reform relevant laws and regulations, lower the barriers to business entry, limit risks, and improve cooperation policies, the state-run news agency, Wam, reported.
As a result of competition in the global environment for foreign direct investment, Arab nations – among other nations around the globe – have had a challenging time attracting foreign direct investment into the region.
The AMF 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 such as monetary and 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.
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