Mehdi Taghavi; Mehdi Rezaee
Volume 10, Issue 36 , April 2010, , Pages 15-40
Abstract
In this paper, the model of foreign direct investment attraction into Iran’s Free Trade- Industrial Zones has been estimated on the basis of related theories and studies. The results of this study illustrate that inflation rate and domestic investment respectively have negative and positive effects ...
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In this paper, the model of foreign direct investment attraction into Iran’s Free Trade- Industrial Zones has been estimated on the basis of related theories and studies. The results of this study illustrate that inflation rate and domestic investment respectively have negative and positive effects on the attraction of foreign direct investment into those zones. For the success in absorbing foreign investment, the results of this paper also show that some policies other than mere liberalization policy of foreign capital inflow are necessary. If Iran successfully create a suitable economic atmosphere in order to motivate free domestic investors, both in the national economy and in the zones then Iran may manage to attract foreign investors. This study indicates that high inflation rate and low
attraction of domestic investments are implications of country risk, which lead to less attraction of foreign investments to the zones on the other hand, small amount of domestic capital in free zones in turn decreases the attraction of foreign direct investment into zones, as a consequent effect on foreign investment.
