Determinants of foreign direct investment in Iran: assessing the standard factors

Title: Determinants of foreign direct investment in Iran: assessing the standard factors



Author: M. Moniruzzaman; Masuma Khatun Kazi; Hala Mohammad Al-Atiyat; Rana Mahmood

Address:
Department of Political Science, International Islamic University
Malaysia, Kuala Lumpur 53100, Malaysia ' School of Business Innovation
and Technopreneurship, Universiti Malaysia Perlis, Pengkalan Jaya, Jalan
Alor Setar – Kangar, 01000 Kangar, Perlis, Malaysia ' Hekma School of
Business, Dar Al-Hekma College, P.O. Box 34801, Jeddah 21478, Saudi
Arabia ' Urumqi Hayat Co, Ltd, Xinjiang 301811, China

Journal: J. for Global Business Advancement, 2014 Vol.7, No.1, pp.38 - 54

Abstract:
This paper examines the determinants of foreign direct investment (FDI)
of the Islamic Republic of Iran based on those of Malaysia that have
been successful in attracting FDI since the early 1980s. The model
adopted was based on a previous study on FDI determinants in Malaysia.
Results of multiple regression analysis to determine whether FDI
determinants in Iran are of the same significance as they are for
Malaysia showed that none of the determinants under the study (economic
growth, growth of export, exchange rate and balance of payment), except
for government expenditure, is significant in affecting the flow of FDI
in the case of Iran. On the basis of these results, the conclusion is
drawn that these typical determinants fail to reflect the case of Iran.
The study argues that one needs to look at Iran from a different
perspective of FDI as the country is an outlier in the global economy
owing to international sanctions.

Keywords: FDI
determinants; foreign direct investment; Iran; Malaysia; business
environment; multiple regression analysis; economic growth; export
growth; exchange rate; balance of payments; government expenditure;
international sanctions.

DOI: 10.1504/JGBA.2014.058882

Inderscience Publishers