Effects of FDI on Economic Development in Kurdistan Region

Abstract

The study examines the effects of foreign direct investment (FDI) on economic development of Kurdistan Region/Iraq (KRG). The study was motivated by observations made which showed that there is a slowdown in infrastructure development and employment growth, and ideas suggested that such problems can be dealt with by attracting a lot of foreign direct investment inflows. The study employed a deductive approach which uses existing literature and data sources to ascertain the probable effects of foreign direct investment on economic development of Kurdistan Region. The findings established from the study showed that government intervention in the economy is hampering foreign direct investment growth. The findings also showed that there is inequality in the distribution of foreign direct investment and that much of the foreign direct investment is more concentrated in Erbil and Dahuk. The study also outlined that there are a lot of economic inefficiencies which are restricting the ability of Kurdistan Region to attract and use foreign direct investment. The findings showed that the risky economic outlook still remains the major determinant of FDI inflows into KRG. Foreign investors have been exhibiting bearish behavior towards investing in KRG. The findings also showed that the impact of FDI on economic development in KRG is also influenced by the concentration of investment projects and the distribution of FDI funds. Conclusions were made that foreign direct investment is important for the growth and development of Kurdistan Region.