Assessing Determinants to Foreign Direct Investment in Iraq's Oil and Electricity Sectors: An Exploratory Case Study

Economic development, including foreign direct investment (FDI), is important for every country; however, it's vital in those countries that have gone through armed conflict and are living its aftermath. To improve on their predicament and fulfill their aspiration of becoming developed economies, post conflict countries such as Iraq need to embrace economic openness and engage the world economy through trade and investment. Economic development plays an important role in creating peace and the rebuilding of a post-conflict county. The need for foreign capital inflows to augment a post conflict country exhausted resources becomes inevitable. The impact of state institutional fragility when coupled with abundance of natural resources and environmental risk factors on FDI has not been addressed adequately in current literature. The objective of this study was to assess the determinants of foreign direct investment in post conflict countries, such as Iraq, with abundance of natural resources. A qualitative method and exploratory case study design were utilized to conduct the investigation. Interviews with 22 subject matter experts were conducted. Security, political instability, government policies, state and economic institutions, corruption and banking systems were found to be the most important factors impacting FDI in a post conflict country such as Iraq. While FDI determinants (or more accurately locational variables) in post-conflict countries with abundance of natural resources reflect those of lraq, however, the rankings of their importance differ from one country to another due to differing history, local culture, economic conditions, and conflict levels. The persistence of violence in post-conflict countries was not seen as a deterrent to investment activities by multinational enterprises (MNEs). While natural resources were the main motivation for FDI inflows IV in Iraq and other post conflict countries with abundance of natural resources, however, high-value infrastructure projects also attracted noticeable investment. It is recommended that future quantitative studies validate the results of this investigation and demonstrate the relationship between FDI and the assessed factors impacting its inflow.