Foreign Direct Investment in the United Arab Emirates: a Critical Evaluation

FOREIGN DIRECT INVESTMENT IN THE UNITED ARAB EMIRATES: A CRITICAL EVALUATION

Project Report

Prepared for

Dr Gwendolyn Rodrigues

TBS983

Prepared by

Naser Hamdan

4115119

22/11/2011

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TABLE OF CONTENTS

1. INTRODUCTION

2. LITERATURE REVIEW

3. METHODOLOGY

4. FINDINGS AND DISCUSSIONS

* FDI GROWTH AND DIRECTION IN THE UAE

* MARKET SIZE

* OPENNESS

* ECONOMIC STABILITY

* POLITICAL STABILITY

* THE LEGAL ENVIRONMENT

* ECONOMIC INCENTIVES

* INFRASTRUCTURE

* EXAMPLE: 3 GOOD INTERNATIONAL TRADING FZCO

5. CONCLUSION

6. RECOMMENDATIONS

7. REFERENCES

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ABSTRACT

The aim of this report was to provide a critical evaluation of the United Arab Emirates (UAE) economic environment for Foreign Direct Investment (FDI). The scope of investigation covered the growth and direction of FDI, as well as, a number of 7 determinants of FDI pertaining to the UAE. This paper depended hugely on legitimate, secondary sources for the relevant data, information, and empirical evidences. In addition, the experience of a foreign business was incorporated to provide insights on the benefits and problems resulting from investing in the UAE. The major findings in this paper suggest the following. The UAE had a steady growth in FDI inflows between periods of declines due to uncontrollable political and economic factors in 2002 (September 11, 2001) and 2009-10 (the 2008 financial crisis). It was also found that the direction of FDI reflected a government strategy of "mapping" FDI to particular favorable sectors. In terms of market size, the UAE as a market by itself is small but could host FDI to penetrate neighboring markets in the region. Again, a strategy of "mapping" FDI led to openness in particular sectors while many other sectors remain restricted. The UAE economy became relatively instable in recent...