FDI in GCC countries: Current and future research

Inward FDI in the GCC countries has more than quadrupled between 1990 and 2006 reaching about $113 billion. The current research on FDI in GCC countries has focused on the location determinants based on the location advantage hypothesis of Dunning's (1981) ownership-location-internalization paradigm. The main location advantage the GCC countries have is oil. In addition, they possess well developed infrastructure and highly open trade. The Achilles heel, however, lies in education and institution quality. In order to strengthen foreign investment-conducive institutions, the GCC countries have signed a number of bilateral investment treaties. One implicit assumption of the current research is that FDI is beneficial to the economy. The impact of FDI, at the aggregate and sectoral levels, on growth, employment, domestic investment, technology and technological spillovers, human capital, and domestic investment constitutes a set of rich future research agenda.