Propuestas del movimiento sindical a escala global

The research has provided support for several of the determinants of FDI flows traditionally found in the literature, added new insights with respect to the role played by environmental risk factors and provided for the first time an in-depth study of the role played by energy reserves and energy prices in the MENA region.

Regarding the overall determinants of FDI in the MENA region, the research is consistent with the generally accepted view in the literature that FDI flows are to a large extent determined by market

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attractiveness, as measured by overall market size (GDP) and GDP per capita. This finding is supported by both the econometric models and the case study.

The research also finds a positive relation between manufacturing exports and FDI, indicating that open economies are better able to attract FDI. Although the dynamics of this relationship have not been investigated in detail in the econometric analysis, the general importance of this factor is also supported by the case study, as companies are seen to prefer to invest in open economies.

The findings with respect to the role played by environmental risk demonstrate that there is no significant relation between overall levels of environmental risk and a country‘s performance in attracting FDI. According to the results of the econometric models, the reason for this is that aggregate measures of environmental risk contain some elements that deter FDI and other elements where poor risk scores are associated with high FDI inflows. Poor scores on bureaucracy quality, democratic accountability and law and order deter FDI and these elements together can be

considered as a measure of country risk in the context of FDI. On the other hand, poor scores related to government budget and current account measures are associated with relatively high FDI inflows, as governments seek to address imbalances through FDI. Therefore, in line with the most recent academic literature, the econometric models and the case study provide support for the view that investors pay more attention to institutional quality and regulatory stability than to overall levels of environmental and political risk. This is particularly the case for FDI into non-OPEC countries. FDI into OPEC countries is more concentrated in the energy sector where companies may make

arrangements directly with the host government and can potentially act somewhat independently of prevailing institutions.

With regard to a country‘s natural resource endowment as measured by the combined proven oil and gas reserves of a country, the research finds that there is a negative relationship between a country‘s endowment of energy resources and inward FDI. Although it may seem counter intuitive initially that countries with oil and gas reserves attract less FDI, there is a logical explanation for this finding in line with the ‗Dutch disease‘ or ‗resource curse‘ theories. Countries with substantial oil and gas reserves have no requirement for foreign investors‘ funding in order to exploit their resources; they need knowledge and expertise from the global market rather than financial resources and have typically acquired the necessary expertise through licensing or joint ventures. It appears that energy resource rich countries have historically made policy decisions that restrict foreign ownership and

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limit FDI in order to maintain control over its key resources. This theory is supported by the level of perceived restrictions to foreign investors reported by the World Economic Forum (Lopez-Carlos & Schwab, 2005 and 2007). Further support for this view is found in the result of the econometric analysis that countries with poor scores on budget deficit and trade balance measures have attracted relatively high levels of FDI. As opposed to oil rich countries, those countries that are in greater need of FDI are more likely to accept the concerns that foreign investment may cause. The ‗Dutch disease‘ argument does not transfer itself exactly to the MENA region, in the sense that many countries have pegged their exchange rate to the US dollar and have not suffered from a currency appreciation as experienced by the ‗Dutch disease‘. However, the broad ‗resource curse‘ analogy remains valid in the context of FDI performance.

More recently, towards the end of the sample period, there is some evidence that energy rich

countries such as Saudi Arabia and Qatar are opening up to foreign investors in an effort to diversify their economies. However, other oil rich countries such as Algeria, Libya and Kuwait have

maintained their restrictions and continue to attract low levels of FDI.

The role of oil prices is found to be significant in determining FDI flows for both OPEC and non- OPEC countries in the region, with a lagged effect of one year tested in the econometric models. With the exception of just one study, this relationship has not been tested elsewhere in the literature. A likely explanation for the positive role of oil prices in attracting FDI is that higher oil prices feed their way through the investable funds that government investment vehicles such as Sovereign Wealth Funds have at their disposal. Some of these additional funds are in turn invested in regional economies, as countries in the MENA region have been growing fast and have generally shown increasing openness to foreign investors. A complementary explanation for the role played by oil prices may be found in the fact that FDI in oil exploration and extraction becomes more attractive as energy prices rise. This argument can apply to OPEC countries as well as oil producing non- OPEC countries such as Egypt, Syria and Yemen.

In summary, the determinants of FDI in the MENA region are found to be:  Market attractiveness (+ve)

 Openness to trade (+ve)  Institutional quality (+ve)

163  Natural resource endowment (-ve)

 Oil prices (+ve)

Several additional elements of a country‘s hard and soft infrastructure were also found to be major determinants of investment location determinants in the case study. Specific factors considered in this area include a location‘s international flight network, quality of life (schools, entertainment, etc.) and the availability of qualified staff. Due to data availability constraints, it has not been possible to test for these factors in the quantitative research.