Do GCC market-oriented labor policies encourage inward FDI flows?

In this paper, we empirically examine the impact of market-oriented labor policies on inward FDI flows to the GCC countries. The paper adopts different estimation methodologies to address endogeneity and cross-sectional dependence. Reliance on professional management reduces inward FDI flows to the UAE while linking pay to productivity reduces inward FDI flows to both Bahrain and the UAE. Trade openness and infrastructure development have a positive influence, while human capital development has a surprisingly negative influence. Evidence, therefore, does not support the view that flexible labor market policies encourage inward FDI flows to GCC countries.