Determinates of the United Arab Emirates Foreign Direct Investment Inflows

The growth of FDI in the world has been significant in recent years. Between 1990 and 2000, the world’s FDI inflows increased more than five times, and after 2000, the world’s FDI inflows have declined. During the period of FDI expansion, growth has been especially strong since 1997. However, most of the FDI transactions were between the developed countries. The distribution of FDI is unequal and less developing countries face difficulties in attracting FDI. Despite the fact that FDI is increasingly important to developing countries, over the past few years, the share of the developing countries in world’s FDI inflows has been declining. This study investigates the effect of some macroeconomic factors on net foreign direct investment (FDI) inflows in the United Arab Emirates between 2002 and 2011. Its theoretical framework is based on the concept of Adaptive Theory and Market Efficiency Theory. To achieve the objective of this study, time-series annually data are used. Four macroeconomic factors are chosen as FDI determinates in the UAE, which are government development expenditure, saving deposit, inflation rate and export goods and services. By using regression and correlation analyses, this study found some results which are considered as empirical evidences for future researchers. This study found there is a positive and significant relationship between two of the factors with FDI inflow which are government development expenditure and inflation rate. On the other hand, the other two factors, saving deposit and export goods and services are to have no effect on FDI inflow into the UA