Key Factors Affecting the Investment Attractiveness of an Oil Producing Country

Abstract

Foreign direct investment (FDI) is the engine of growth of all countries, contributing to the inflow of financial capital, technology, skills, employment, to the establishment of production of modern goods and services, which enables a national economy to become more competitive in the global market. However, the developing or transition countries often lack the capital to finance their own development. Analysis of 21 developed and developing oil-producing countries from 2008 to 2014 show that the most important factors for attracting investment in the oil and gas sector are the discovery of attractive fields, the creation of a developed and modern infrastructure, increases proven reserves of hydrocarbons, and of corruption. Less important but still factors are a stable currency, an open trade regime, favorable business conditions, as well as lower taxes on oil-producing business.