Despite the events of the Arab Spring, FDI inflows into Arab countries rose during 2012 by 9.8 per cent to reach $47.1 billion compared to $42.9 in 2011, according to the Arab Investment & Export Credit Guarantee Corporation (Dhaman)’s report Investment Climate in Arab Countries 2012-2013".
Out of 20 Arab countries with available data for 2012, a total of 15 countries witnessed increases in FDI inflows, said a media statement summarising the report. Notably, all of the Arab Spring countries (with the exception of Syria where no data was available for 2012) witnessed increases in FDI inflows during 2012.
Dhaman also launched, for the first time, its composite measure "Dhaman's Investment Attractiveness Index (DIAI)" which describes a host country's attraction for FDI and benchmarks it against 110 countries.
Globally, Dhaman's Investment Attractiveness Index (DIAI) showed that OECD economies are the most attractive destination for FDI. USA ranked first as the most attractive destination for investments, followed by Germany, UK, Switzerland, Netherlands, France, Belgium, Hong Kong, Japan and Canada, respectively.
As for the Arab countries, the report showed that GCC economies are the most attractive destination for investments in the Arab region. The GCC countries have fueled growth in infrastructure, backed by their large oil and natural gas reserves, current account surpluses, politically stable economies, liberal business environment and strategic geographical locations.
UAE topped the list of Arab countries as the most attractive country for investments, ranking 38th globally, followed by Kuwait which ranked 41st globally, Bahrain 43rd, Qatar 49th, Oman 54th, and Saudi Arabia 56th, respectively.
There is considerable dispersion across Arab countries with respect to the ten key drivers, due to variation in countries economic stages, investment attraction practices, such as tax incentives, relying on natural resources or sound macroeconomic frameworks etc.
However, it is still evident that most Arab countries show strong deficits in almost all criteria that affect differentiation-technological performance. This deficiency is particularly debilitating for attracting technology seeking or sourcing FDI. It limits the positive externalities and productivity effects expected in particular from MNEs investment decision, it said.