Protección contra pérdida de excitación 40G

The research findings have several important implications for policymakers as well as for companies considering investment in the MENA region.

(i) Implications for policymakers

The findings on the importance of institutional quality and stability, law and order and democratic accountability in attracting FDI point towards specific areas to which policymakers should focus their efforts. Other important location factors that are used in company level decision making include infrastructure and quality of life, which in turn determines the potential availability of highly skilled labor. These factors are more at the forefront of concerns of international investors than other elements that may appear on global rankings of competitiveness or ease of doing business in a country, such as the number of days required to register a company.

For policymakers looking to design and implement policies that attract FDI, another area of attention should be the level of ownership restrictions imposed on foreign companies. Given the overwhelming preference among experienced international investors for full ownership of their international operations, if a country wishes to attract foreign investment it must make full ownership a possibility in all but the most sensitive sectors of its economy. In the light of the adverse views and experiences regarding joint ventures, MENA countries should seriously consider doing away with the requirement for local partners for foreign companies since such partners typically play a role primarily as private licensing agents rather than true business partners. If a foreign investor works with a local partner it should be out of choice rather than obligation. At the same time, foreign investment facilitation support (for example through Foreign Investment Agencies) can support foreign companies in their search for local partners based on a genuine sharing or bundling of capabilities.

Finally, policymakers should continue the development of recent years in terms of viewing FDI as a vehicle for knowledge transfer, employment growth, trade growth and economic diversification rather than as a means to obtain foreign currency reserves. Countries that are in need of economic diversification should actively pursue policies that attract FDI. Countries with high budget or trade deficits, who may be in disadvantageous bargaining positions with foreign investors, should be careful in attracting FDI that may not generate sufficient overall economic benefit.

168 (ii) Implications for companies

For companies who are currently not investing actively in the MENA region, the research demonstrates that FDI has grown significantly despite high levels of environmental risk. Foreign investors in the MENA region have accepted that the region is structurally more risky than others. The political upheaval of 2010 and 2011 has only added to these concerns, with anecdotal evidence suggesting that many companies have put investment projects in the MENA region on hold. However, the returns provided by investments in the MENA region may well compensate adequately for the additional risk taken on. Experienced international investors do take

environmental risk factors into account in their decision making, but they have a clear view of which types of risks affects them most and employ managers with regional experience who are skilled at managing these risks.

Companies that are new to the region may establish their first operations in markets where environmental risk and cultural distance levels are manageable and use these first steps as a launching pad for regional expansion. When investing in the company‘s core business, licensing arrangements offer more flexibility than joint ventures. Licensing may be a preferable option if an entrant is not yet willing to commit to a wholly owned subsidiary and transaction costs are low. Employing local staff and having local executives on company boards may well be more effective mechanisms to bridge cultural divides than joint venture arrangements.

Companies with existing operations in the MENA region should carefully re-evaluate their location and ownership decisions, especially in light of the regional political turmoil that started at the end of 2010 and the changing regulatory landscape in the region. In some cases, risks may have reached the threshold level at which operations in a country are no longer desirable or other locations in the region may become relatively more attractive for investment. In other cases, new legislation may make full ownership a viable option which may not have been the case at the time of the initial investment. The competition between countries in the region to provide an optimal business environment for international investors is likely to continue, thereby offering investors new investment options.

Although certain risks have increased, the departure of some players in certain countries will create opportunities for others. In all cases, successful companies in the MENA region will be able to

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operate throughout periods of turbulence rather than wait for some political end game to play itself out.

Companies considering a first entry into the MENA region need to maintain some flexibility around their ownership and operation mode choices. First, recent events have shown that political and security conditions can change rapidly in the region. This makes it desirable to be able to move MENA operations relatively easily from one country to another as circumstances change. Secondly, the evolving legislative framework of a number of MENA countries may make certain operation mode options available in the near future that are not available today. In particular, full ownership is likely to become increasingly available, either in free zones or in a country‘s mainland. Companies who are deeply tied to other arrangements will find it more difficult to switch once a preferred alternative mode becomes possible.

In terms of environmental risk analysis, companies should look beyond overall levels and scores of environmental risk and analyse those aspects of the political, business and institutional environment that affect them most. The ratings that can be obtained from political risk rating companies can only serve as the start of a risk analysis process, not the end of it. As has been seen in 2011, severe turbulence may occur in countries with good overall risk scores. Such turbulence will affect businesses in different ways, with even potentially advantageous effects for investors in certain adjacent countries. At the same time, significant business opportunities may exist in countries with poor risk scores, as evidenced by Lebanon‘s consistent success in attracting FDI and recent interest shown by investors in Iraq.