Classification of OIC Countries Based on Factors Influencing Foreign Direct Investment (FDI)

Najarzadeh, Reza; Shaghaghi Shahri, Vaheed

Classification of OIC Countries Based on Factors Influencing Foreign Direct Investment (FDI)

Authors

Abstract

There are several indices based on which the member states of the
Organization of the Islamic Countries (OIC) can be classified in
attracting foreign direct investments. Some of the more important
ones are gross domestic product (per capita or its growth rate),
inflation rate, trade openness index, wage rate index or unit labor cost
(ULC), the ratio of savings to gross domestic product, the ratio of
foreign debt to gross domestic product, average tariff rate, the ratio of
government expenditure to gross domestic product, the Gini
Coefficient (an income distribution indicator), the ratio of domestic
investment to gross domestic product, time laps in foreign
investments, exchange rate variability, political stability index,
foreign investment risk index, economic freedom index, globalization
index, regionalism index and other factors impacting foreign
investment attraction.
In this article an attempt is made to classify the member states of the
Organization of the Islamic Countries, OIC, based on their ability to
attract foreign direct investments, FDI. In so doing, economic, social
and political indices affecting FDI were introduced and then by using
the Numerical Taxonomy technique this classification was done. The
results indicate that Iran is in the thirty fifth places among forty three
countries.

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