Tim Rogmans

The determinants of foreign direct investment in the Middle East North Africa region

Purpose – The purpose of this paper is to test the determinants of foreign direct investment (FDI) into countries of the Middle East North Africa (MENA) region.Design/methodology/approach – The research is based on an econometric model that includes factors that potentially drive FDI flows into countries in the MENA region.Findings – Energy endowments have a negative impact on FDI flows into a country. GDP per capita, openness to trade and oil prices have a positive impact on FDI inflows, while aggregate measures of environmental risk are not a differentiating factor among countries in the region.Originality/value – This paper demonstrates that the “Dutch disease” concept applies to FDI in resource rich countries in the MENA region. Countries with large amounts of oil and gas have are more likely to have policies and institutions that inhibit FDI. Countries that value the spillover effects from FDI need to reconsider legislative and institutional hurdles that remain.

The Political Economy of Free Trade

This chapter has two goals. The first is to review the theoretical arguments why free trade can be beneficial for a country from both an economics and institutional perspectives. The second goal is to explain how, despite the potential benefits associated with free trade, countries still have a number of policies in place which restrict the freeflow of goods, services and capital. We review a number of these restrictive policies and show the extent of the benefits which are likely to arise as a result of their elimination through a free trade agreement (FTA). Lastly, the chapter concludes with a discussion of some of the limitations associated with bilateral and plurilateral (FTAs) in realising the full benefits of such agreements.

Location and operation mode decision making in the Middle East: a case study approach

Purpose – The purpose of this paper is to develop and test propositions on location and entry mode decision making by foreign direct investors in the Middle East region.Design/methodology/approach – Case study approach, based on in‐depth interviews with decision makers of multinational companies operating in the Middle East.Findings – The results show that foreign investors in the Middle East prefer to maintain the highest level of ownership and control permitted in a country, even in the face of political risk.Originality/value – Location and entry mode decision making has typically been studied using quantitative methods. This research uses a case study approach and develops a new model of entry mode decision making, demonstrating that experienced foreign investors do not view joint ventures as an effective mechanism to manage political risk, but prefer to keep political risk management in‐house.

Hay Group in the Middle East

Subject area Management consulting, foreign direct investment, location decisions, business planning. Study level/applicability Undergraduate and Postgraduate Business and Management or Executive Education. Case overview This case outlines the location decision-making process for Hay Group, a global management consulting firm. The process and factors involved in making decisions on new office openings in the Middle East region are highlighted. Particular attention is paid to location factors such as legislation, taxes, political risk and market attractiveness. Expected learning outcomes The case enables participants to learn about business conditions in the Middle East and to develop a business case for the opening of operations in new markets. Supplementary materials A teaching note is available on request.

Prospects and challenges of free trade agreements : unlocking business opportunities in Gulf Cooperation Council (GCC) markets

1. Background And Context Of The Study 2. The Political Economy Of Free Trade 3. GCC Market Scope And Competitiveness 4. GCC-Australian Trade And Investment Trends And Patterns 5. Challenges And Opportunities For Australian Businesses In GCC 6. Australian-GCC FTA: International Business Prospects And Limitations

Australia-GCC FTA: International Business Prospects and Limitations

This chapter summarises the main findings of the study and provides a number of recommendations to both businesses and policy makers so that the likely benefits of an eventual Australian-Gulf Cooperation Council (GCC) free trade agreement (FTA) can be optimised. The most common difficulties faced by Australian businesses are in the form of non-tariff barriers and local business practices which are deeply rooted in institutions, culture and history. For this reason, the study argues that in order for Australian businesses to fully realise the potential benefits of an eventual FTA, special considerations should be given to institutional reforms in the GCC as an integral part of the FTA framework. A FTA can serve as an effective mechanism for addressing institutional voids in smoothing the conduct of businesses between the two regions. The study also offers some practical recommendations to businesses in expanding into some of the growth sectors in the GCC in a post FTA era.

Challenges and Opportunities for Australian Businesses in GCC

This chapter reports the results of a survey of Australian businesses currently doing business in the Gulf Cooperation Council (GCC). The main purpose of the survey was to gain a better understanding of the challenges which Australian businesses face when engaged in international business activities such as exporting, importing and investing in GCC countries. The research assesses how the removal of internal and external trade barriers would likely benefit businesses. The findings suggest that the main benefits are likely to accrue to export businesses while the effects on import and investment are likely to be minimal. Export revenues are likely to increase by an estimated 20% under the scenario where there is a free trade agreement (FTA) between Australia and GCC.

Background and Context of the Study

This chapter provides the necessary background and context for the study. Australia and the Gulf Cooperation Council (GCC) states have a long history of trade and investment activities between them. Trade and investment have evolved gradually over the years. However, the acceleration of globalisation and the resulting changes taking place in the structure of the world economy have led many small economies such as Australia and the GCC states to engage strategically with their trading partners in order to remain an integral part of the global economy. Australia and GCC started to negotiate a free trade agreement (FTA) in 200J with negotiations slowing down for a number of years. Recently, Australia has shown a strong determination to conclude a successful FTA with the GCC. Such a prospect raises a number of interesting questions regarding the potential benefits of a successful Australia-GCC FTA which is the subject of this research.

GCC Market Scope and Competitiveness

This chapter provides an overview of the recent trends and emerging patterns in Gulf Cooperation Council (GCC) consumer market and business environment. The chapter starts by assessing the potential consumer market size of the GCC by analysing emerging demographic trends. Then, the chapter provides an overview of emerging economic sectors with future growth opportunities. This is followed by an analysis of the international competitiveness of the GCC and its member states.

GCC-Australian Trade and Investment Trends and Patterns

This chapter provides an overview of the recent trends and developments in Gulf Cooperation Council (GCC)-Australian trade and investment. GCC-Australian trade and investment has increased significantly over the last two decades. However, a closer look at the recent trends shows that so far Australian-GCC trade and investment remain highly concentrated in a few countries and in a narrow range of sectors. Opportunities therefore exist for Australian businesses to expand and diversify more broadly across all GCC states in more sectors of the economy.