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The Impact of FDI on the Financial Market of Qatar


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The aim of this paper was to evaluate the impact of FDI in Qatar. To achieve this objective, research was conducted in the region. The paper began with an introduction that offered background information on the research topic. The introduction provided the statement of the problem, the research objectives, and the research questions. The second section was a literature review on important sources related to FDI in Qatar. This section provided an in-depth analysis of the situation and rules regarding foreign direct investment in the country. The third section discussed the research methods that the researcher used to obtain the information needed to conduct the study. This section presented the survey approach and the Delphi approach as the two main methods used to gather information for the study. The justification for using these methods was provided for the choice of the two methods.

The fourth section was the data analysis and presentation which analyzed the data that was obtained from the participants of the research. This section employed the use of bar graphs and pie charts to present the data that was collected from the study. The data analysis was conducted by statistical package for social sciences (SPSS). Several statistical tools were used to test the hypothesis of the study. This section also included a thorough discussion of the findings that were obtained from the respondents. The fifth section provided conclusions on the research and offered recommendations on how foreign direct investment can be improved in the country. The paper ended with a reflection section. This section discussed the effectiveness of the paper in addressing the research questions and objectives. This section critically analyzed the methods that were used in addressing the research objectives and the research questions.



This section of the paper offers background on the study and describes the research problems and displays the study objectives, research questions, hypotheses, aim, validation, scope, presumptions, and challenges of the study.

Background Information

The local companies will have lower operating costs than their international counterparts. Therefore, products sold by foreign companies will be more expensive than locally-produced goods. Even though this move may favor domestic companies, it discourages foreign companies from expanding into a country. Therefore, it is important for the government to set suitable policies that will attract foreign investors (Alkhasawneh 2013).

Statement of the Problem

In spite of the efforts made by the government, the country has not met its forecast projections on FDI investments. This fact poses a problem since the country will not attract sufficient capital into the country (Almfraji, Almsafir, & Yao 2014). The data from the country indicate low FDI. Therefore, foreign investors may shy away from investing their money in the country. The government has attempted to make the market attractive for foreign investors. This has been achieved by eliminating the obstacles to external trade (Almfraji, Almsafir, & Yao 2014). However, the government's strategies are not achieving the intended objectives, and as a result, the country is not reaping the benefits of foreign investment. The foreign investment ensures that the current gains sufficient capital to boost trade within the country. Moreover, FDI has the potential to provide a boost to numerous businesses that employ many people in the country (Bitzenis, Vlachos, & Papadimitriou 2012).

Aim of the Study

The goal of the inquiry is to evaluate the impact of FDI on the financial market of Qatar. The study aims to evaluate the ways in which FDI improves the financial market in Qatar. The study also provides recommendations on how FDI can be enhanced by the government.

Research Objectives

The major aims of this research study are:

  1. To understand the advantages and disadvantages of FDI in the Qatar financial market.
  2. To analyze the challenges of investing in Qatar.

Research Questions

  1. What are the advantages and disadvantages of FDI in the Qatar financial market?
  2. What are the challenges of investing in Qatar?

Justification of the Study

This study will help identify the areas that the government of Qatar can employ to increase FDI in the country (Görg & Jabbour 2009). This will in turn help the country to improve its economy. Globalization has led to a scenario where companies look to invest outside of domestic markets. FDI has presented a suitable way for companies to invest in foreign countries. However, the regulations set in the past by the governments of numerous countries restricted foreign investment. This included compelling foreign companies to fulfill many requirements before gaining entry to foreign countries.

However, recent trends have led the governments to make adjustments to these regulations so as to reap the benefits associated with the process. For instance, the majority of governments have abolished regulations that prohibited foreigners from investing in their respective countries. Qatar is at the forefront of the abolition of these regulations. Moreover, this study will offer insight into the attractive features that Qatar offers that attract foreign investment. The study will help the government make amendments to the current regulations. This in turn could help the country obtain higher levels of revenue from foreign direct investment (Ahmed 2013).


The following will be the study’s main hypothesis:

  1. H1: Government regulations of the host country greatly affect foreign direct investment.
  2. H2: FDI reduces the unemployment rate.

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Literature Review

Until recently, only 49% of the foreign firms conducting business in Qatar were involved in FDI (Chhair & Ung 2014). Nevertheless, amendments have permitted foreign businesses to have a one percent ownership of their businesses in certain sectors like agriculture, industry, tourism, and health. However, certain sectors still have very strict regulations on foreign direct investments. For instance, the banking and insurance sectors were not open to FDI by foreign firms. An amendment in 2004 allowed foreign firms to engage in business in these two sectors. However, there are restrictions on ownership. A foreign firm cannot have full ownership of banking and finance institutions. International law organizations with at least15 years of experience in their native countries are permitted to set up operations in the country.

However, these organizations are only granted licenses when the pertinent authorities in Qatar are convinced that the businesses would be of value to the country (Blaine 2008). International organizations are expected to use domestic agents for issues related to sponsorship and residence of workers. Qatar has closed specific sectors from FDI. These areas include public transport, water, steel, cement, and marketing (International Monetary Fund 2007).

The regulation of FDI includes conditions that must be met before an international organization can commence operations. For instance, the regulation states the business started by a foreign firm must be aligned with the country’s development plans. Moreover, preference is offered to businesses that utilize raw materials that are available in the region, manufacture merchandise for exports, utilize advanced technology, and enhance the growth of national human resources (Drabek & Mavroidis 2013). Foreign investors now have the right to land via lease agreements for 99 years. When the lease expires, the companies can apply to have it renewed. Moreover, foreign investors can own residential property in designated projects like the Pearl and the West Bay Lagoon. Import licenses are only available to legal citizens of Qatar and companies that are owned by Qataris. However, an exception is made for companies that have contracts with the government of Qatar (Dunning & Gugler 2007).

Research by various accounting firms like PricewaterhouseCoopers indicates that Qatar is the second easiest country in terms of tax burdens. This is because the government has set policies where the citizens do not pay corporate and income taxes. Citizens are only required to pay Zakat, which often amounts to 2.5% of returns (Dutta & Roy 2009). However, foreigners are liable to pay taxes. Currently, foreign investors pay a constant rate of ten percent in all sectors of the economy with the exception of the energy sector. Foreign investors in the energy sector are expected to pay a flat rate of 35% during their application to conduct trade. The new tax regulations apply to revenues from trade activities, contracts, and properties. However, the finance ministry may grant tax holidays for ten years for foreign investments in major sectors (Chhair & Ung 2014). These features help the country by attracting sufficient foreign direct investment from multinational enterprises.

In 2014, various changes were made to the regulations on FDI in the country. The new regulations ascertained that all foreign investors are permitted to own up to 49% of shares in Qatari shareholding firms (Chhair & Ung 2014). However, foreigners may own more than this figure if they obtain cabinet approval. The major aim of this move was to raise the limit of acceptable foreign possession levels in the listed organizations from 25% to 49% in the majority of the listed organizations (International Monetary Fund 2007). Moreover, there was a shift in the stocks of Qatari. The citizens of the Global Cooperation Council (GCC) member states were previously regarded as non-Qatari citizens are now treated as citizens of the country for investment purposes. Therefore, their ownership of stocks in the country is not counted as foreign ownership.

Doha houses QFC that permits main global financial organizations to commence operations in Qatar with full ownership of their businesses (Firger et al. 2012). However, QFC is not an offshore hub or an asset development. Organizations licensed by the QFC are free to utilize local and foreign currencies. The financial organizations operating in Qatar enjoy a suitable tax regime. Currently, there are 171 licensed organizations at the QFC (Görg & Jabbour 2009). They include banks, investment organizations, insurance companies, and other professional organizations. About seventy QFC licensed firms are controlled by QFCRA. Nevertheless, insurance firms can offer services to wholesale and retail customers, and retail asset management is permitted.

The features of the host nation are the major factors affecting an investor’s decision to invest. There are four main factors affecting FDI including market factors, cost, trade barriers, and the investment environment in the host country (Perri 2015). The majority of the foreign firms evaluate the attitude of the host country’s government towards FDI, political stability, the size of the local market, and the potential of the local market (Egger & Radulescu 2008). Qatar has a suitable investment climate. The tariffs on imports have been lowered, and the barriers to trade have been eliminated. The market is a major concern for foreign firms since it determines the scale of production. When the local market size is large, foreign firms can produce large amounts of goods.

The returns from oil and gas have been impressive. The country now has one of the highest incomes per capita in the world. Also, the returns from oil and gas industries have enabled the citizens to have a high standard of living. Moreover, the hydrocarbon industry has been growing progressively. This growth has enabled the country to earn a considerable amount of income that has been used to offset the debt accrued in the 1990s. The country has spent a significant part of the revenue to invest in economic and social infrastructure. The country began to venture outside oil and gas during its early stages of development. For example, Qatar Airways was launched in 1994 and while it initially struggled, it was re-launched in 1997 and has since grown progressively. Also, broadcaster Aljazeera, which has its headquarters in Qatar, has become a major international media player.

Qatar Economic Forecast

Qatar is currently facing problems related to higher unemployment. Nevertheless, the country has made a precise focus on the entry concerning the investor’s flow into Qatar, which is anticipated to rise and a possible increase in FDI investment (Mengistu & Adhikary 2008). Nevertheless, the population of the nation is also projected to grow in the subsequent few years. The population pressure complemented the foreign influx that grew by 4% between 2010 and 2014. The citizens of Qatar are also the richest in the world. The GDP of Qatar per capita is projected to reach $116,996.84 in 2015, making it the highest in the world.

The existing account of the country is anticipated to increase more progressively. In 2010, the account of Qatar was reported to be $19.7billion with a rate of 40.2% compared to 2009 (Fadhil, Yao & Ismeal 2012). Nevertheless, this growth is more likely to be overshadowed by the 2011 growth rate that offered Qatar one of the biggest current account balances internationally while the country anticipates a present account balance of $42.2 billion in 2015. Qatar is characterized by various positive features that entice foreign investors mainly in the financial markets. Particularly, it has a huge number of international schools offering French Curriculum, English curricula, and other global baccalaureates. Moreover, Qatar also boasts of simple access to main international universities like North-Western University, VCU-Q, and the Weill Cornell.

The telecommunication industry of the country is highly endowed thus is very solid. Furthermore, the economy of the country is connected with widespread and incessantly increasing air links to key global destinations via Qatar Airways. Above all, the major aspect that attracts the majority of foreign investments is the opportunity for foreign investors to own 100% of companies launched in Qatar (Firger et al. 2012). The economy’s financial center situated in Qatar Science and Technology Park and precise industries in any given specified zones is highly promising. The country complements the lack of personal income tax and foreign exchange controls and restriction in the disbursement of funds across borders all of which become lucrative measures to attract more investors into the country’s financial market. In 2009, Qatar saw the total FDI inflows increase by 112% to a tune of $8.7 billion as reported by the World Investment Report by UNCTAD.

Advantages of FDI on Qatar Market

In summary, the FDI inflows into Qatar have several advantages apart from generating some challenges. For example, the FDI has been the main target of the Qatar government as the main component to enhance its permanent economic growth and development approach. FDI has also had an impact on foreign loans that have been reported to have a permanent negative effect on the economy. Also, FDI for the country has been responsible for increasing the rate at which technology transfer is (Görg & Jabbour 2009). Moreover, it also considerably better incorporates Qatar into the international economy and develops a pathway to the international markets. The FDI inflows to the emerging economies have also shifted from the resource-seeking and market-seeking FDI groupings to relatively more resourceful category of FDI. This shift is mostly created by the resultant high level of competition within the international market which has had an impact regarding the decrease of prices (Egger & Radulescu 2008).

Disadvantages of FDI in Qatar

Overall, even though FDI has been known to drive economic growth of the economy, economists claim that its impact is less certain than it may be perceived. It is claimed that FDI exerts a negative impact on the economic growth of Qatar as the recipient nation as it replaces domestic savings instead of improving them (Ahmed 2013). Moreover, another faction posits that FDI enhances efficiency and fosters the economic growth of the recipient country from a sparing or uncertain perspective. FDI is also the major source of both capital and technology in most of the emerging markets. These conflicting notions make it necessary to carry out causal direction checks between FDI and the Country’s GDP.

Research Methodology


This chapter discusses the research methods that the researcher used to obtain the information needed to conduct the study. Research methods are the various systems, approaches, and algorithms utilized in research. Research methods assist the researcher to gather data samples and find solutions and answers to the problem.

The Study Area

This study was carried out in Qatar. The country was selected due to its progressive economy. The region has one of the fastest rates of economic growth. Therefore, the study aims at establishing the impact of FDI on the economy of the country.

Research Strategy

This study embraced two research designs that included the survey design and the Delphi approach. The survey research was selected because it allowed the researcher to gain information from random employees of financial institutions involved in FDI in the country. The survey involved the researcher setting up schemes to obtain information from the population. Also, the research employed the Delphi approach of data collection due to the nature of the research. FDI is a complex topic that requires precise data and opinions from professionals. The Delphi approach entails a group of professionals being involved in several rounds of dialog to establish the cause of events. In this case, the professionals offered insight into the impact of FDI on the financial market of Qatar.

Research Populace

The research population of this study entailed financial institutions such as banks and other organizations that are involved in FDI in Qatar. Several multinational organizations that have headquarters in their domestic countries were included in the research population. The employees of these organizations were asked several questions regarding the market environment of Qatar. However, since the management was involved in the procedures of applying to conduct business in the country, the research focused on employees holding managerial positions. Institutions that regulate FDI in Qatar were included in the research population.

Sampling Procedure and Sample Size

The selected sample involved six organizations. They were obtained using purposive sampling. This sampling method was employed because the study was specifically concerned with organizations that are involved with foreign direct investment. After the organizations were obtained with purposive sampling, random sampling was used to obtain the employees to participate in the study. Thirty employees were selected from the organizations. The Delphi approach obtained a further 30 professionals on FDI investment and economics. Therefore, the total number of respondents in the study was 60.

Statistical Implication of the Sample Size

Normally, hypothesis testing is prone to two kinds of errors by the researchers. The errors are Type I and Type II errors respectively. Type I errors occur when the researcher rejects the null hypothesis when it should be have been accepted. Type II error occurs when the researcher accepts the null hypothesis when it should have been rejected. Both errors affect the validity of the study. With a constant small sample, only one type of the above error can be lowered at a precise time. Nevertheless, when the sample size is increased, the errors are sufficiently reduced to a level where they cannot affect the validity of the study. Therefore, a sufficient sample of 60 respondents was utilized for the study. Thirty respondents were added by the Delphi approach of data collection.

Data Collection Instruments

The data is a survey is often gathered with the aid of questionnaires or interviews. This research employed both tools to obtain information. Two instruments were used because the study wanted to obtain unbiased information from the selected sample. Moreover, quantitative analysis advocates for the use of more than one data collection instrument during the data collection process.


The interviews were mainly used for the employees at managerial positions. This is because the managers of the foreign institutions underwent the legal procedures for starting the business in Qatar. Therefore, they had more knowledge of the policies set by the country for foreign investment. The interviews allowed the managers to explain all the details that were involved.


A questionnaire was constructed to obtain data from employees of the selected organizations. The questionnaires had both open and closed-ended questions. The open-ended questions allowed the researcher to obtain an in-depth understanding of the impacts of FDI explained by the respondents. The questions addressed the objectives of the study. The questionnaires were handed to the respondents and collected on the same day.

Data Validity and Reliability of Research Instruments

Validity designates the extent to which the data collected in the study represent the scenario on the ground. Validity is enhanced by minimizing errors in the process of data collection. A pilot study was done before the main study to establish any weaknesses in the questionnaire. This is because a pilot study identifies any weakness in the questionnaires and other survey techniques employed in the research. Changes were made where necessary before the questionnaires were administered.

Delphi Approach

The Delphi approach was used to attain a deeper perception of the factors that impact FDI on the financial market of Qatar. The Rand Association initiated the Delphi technique in the mid-20th century. This approach intends on obtaining a convergence of opinions amongst a group of experts concerning sensitive topics that are frequently intangible. Professionals are selected to partake in a series of planned surveys using several rounds. In each round, the researcher provides the professionals with an anonymous summary of the results of the preceding round in search of their input and reassessment of their answers to reach group accord. Hence, the plan of this research method is to reduce the inconsistency of the professionals’ responses.

This technique has many advantages. It allows researchers to regulate any occurrence of bias via a well-structured process. The process involves letting experts interact to develop well-thought-out decisions. Furthermore, this method is beneficial when it is difficult to get objective data, or when no practical evidence is available, and when an experimental study is not an option. However, if this method is not correctly planned and implemented, the quality of the outcome may be affected. For example, poor design of survey instruments, poor choice of professionals, a slight effort to reduce bias, and insufficient feedback provided to professionals in every round will largely affect the validity of the results.

The strategy for this design determines how professionals are chosen, the number of professionals in the panel, and the optimum number of rounds. A list of 30 experts was obtained based on the ensuing criterion. The professionals had at least seven years of experience in FDI investment strategies. Round one of the approaches comprised two major sections. The initial section inquired information on the professionals' experience to confirm that they met the standard for contributing to the research. The succeeding question inquired from the experts the impact of FDI on the financial market of Qatar. Also, the professionals were asked to indicate their reasons for the answers they provided.

Hypothesis Testing

A chi-square test was performed between government regulations and FDI. A Pearson value of 40.72 was attained. This shows that there is a relationship between government regulations and FDI in Qatar. A p-value of 0.267 was attained between these two variables. This value is less than the alpha level of significance which has a default value of 0.05. This proves that the relationship between FDI and government regulations in Qatar is statistically significant.

A correlation test was performed between FDI and unemployment rate and a Pearson value of -0.7 was obtained. This shows that there is a negative correlation between the unemployment rate and FDI. Therefore, when FDI increases in the country, unemployment reduces. Therefore, the two hypotheses of the study are accepted.

Advantages of FDI in the Financial Market of Qatar

Resource transfer effects have a great contribution to the financial market. The major resources that are transferred in FDI activities include capital, management resources, and technology (Jensen, Biglaiser & Malesky 2012). Foreign firms have access to capital that is not available in the country. This fact enables foreign firms to impact the inflow of capital to the host country. Moreover, foreign firms can borrow more money from the capital markets compared to foreign firms (Kehl 2009). Therefore, the money available in the host country increases because of the foreign direct investments by multinational enterprises. The locals would have access to loans since the capital available would be sufficient. The interest rates in Qatar are negligible. This fact encourages people to invest in small businesses that stimulate economic growth. Furthermore, when the global flow into the country increases, investors face a lower risk on the capital they invest in the region (Krammer 2010).

Technology on another hand can be used in two major ways to improve the financial market. The technology used by foreign firms can be used in the process of products or on the creation of products (Ahmed 2013). For instance, new technology can help Qatar find more affordable, efficient ways to drill oil. This move would help the country to reduce the operating costs involved with the production of oil. As a result, the country would experience an additional amount of revenue from the money that would be saved by utilizing the new technology. Moreover, the amendments on the law regarding technology by foreign firms in the country have contributed to the increase of new technology. The companies investing in the region are not compelled to disclose the technology they use in their processes. The major effect of technology is reducing the cost of production of several economic activities and instigating simple ways of handling complex tasks (Jensen, Biglaiser & Malesky 2012).

Also, the management skills used in foreign firms can be borrowed by the locals. Often, foreign firms are managed by a staff that has relevant skills. The management of these companies trains the local people employed in their companies. This staff training enables people to gain the necessary skills that contribute to the success of their personal businesses (Kehl 2009). The local people can at some point use this valuable experience to start their own businesses. Due to the vast knowledge that they gathered from foreign firms, their business can one day thrive in the market. The increased volume of business activity arising from the intense use of strategic management stimulates economic growth in the home country (Krammer 2010).

Employment Effects

The employment arising from FDI is both direct and indirect. The foreign firms that begin operations in Qatar employ local citizens from the region (Ramady 2012). The majority of the firms can only higher a larger workforce compared to the local industries. This move reduces the unemployment rate of the region. Currently, Qatar has one of the lowest unemployment rates in the world (Mohtar 2015). Foreign firms are largely responsible for this fact. The citizens who are employed by foreign firms are now able to participate in economic activities. For instance, citizens may take loans from banks and start their own small businesses. Since foreign firms pay higher salaries, Qatar citizens gain access to a sufficient flow of income. The circular flow of income in the country increases. There are numerous investments and spending which stimulate economic growth in the country (Nicholls 2012).

The indirect employment arises when local suppliers begin operations to supply the multinational enterprises with raw materials that they require for their production process (NurNaddia & NurHaiza 2015). Often, the government of the host country sets regulations that mandate foreign firms to source a significant amount of raw materials from the host country. This is because when the firms source the majority of the raw materials from foreign countries, the amount of money that will be available in the host country will substantially fall. Moreover, indirect employment occurs when individual citizens begin businesses to provide a market for the increased spending that will arise when the employed citizens earn money from foreign firms. FDI in Qatar ensures that citizens have money to engage in trade. The low rate of unemployment in the country is one of the major reasons why Qatar citizens are considered amongst the wealthiest in the world (OECD 2008).

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BOP Effects

FDI has an impact on the BOP of the country. Therefore, the government of Qatar places a significant focus on the activities that are undertaken by foreign firms. There are three major ways that FDI can impact the balance of payments. First, the MNEs may establish a foreign subsidiary. The capital account of Qatar benefits from this move (Ramady 2012). The foreign firms can use foreign subsidiaries to export products that they manufacture in Qatar. This move will ensure that Qatar gains sufficient inflow of capital. Secondly, if the foreign direct investment serves as a substitute for imports and exports, the current account of Qatar of the balance of payments will be greatly enhanced (Mohtar 2015).

FDI enhances international trade in the country. Qatar has a very small domestic market. Currently, the country has a population of approximately 1.7 million people (Nicholls 2012). This market cannot utilize all the products that are produced by foreign firms. Therefore, the majority of the goods that are produced by foreign firms are exported to other countries. This results in a situation where the export growth of the country is greatly enhanced. The local firms offer input to the foreign firms; there is a value addition for the input provided because of the anticipated high rate of return. The country benefits by getting more value for the goods that are produced in the country.

Enhances Competition

The foreign firms compel local organizations to improve their products. This happens because foreign firms often utilize the latest technology. Therefore, the output is attained at lower operating costs that make the foreign firms price their products lower to attract clients (NurNaddia & NurHaiza 2015). As a result, local firms are forced to employ better practices that will improve their productivity. Competition is very attractive to other global investors. Often, investors check the level of competition before deciding to invest in a particular country. A high level of competition indicates that investors can enter the local market and have a fair chance of attracting clients.

The majority of the foreign firms require that the competition in the host country be high. Moreover, the clients benefit from the competition between the foreign and local firms since overpricing is not practiced in the market. High competition prepares local firms that may wish to invest in foreign firms. According to several economic theories like the Porter diamond model, local firms have a better chance of succeeding in international markets when competition in the local markets is high. This is because the competition ensures that the firms strive to attract customers by providing excellent services. Therefore, FDI helps foster the competition which eventually stimulates economic growth in Qatar (Organization for Economic Co-operation and Development, 2008).

Disadvantages of FDI on Financial Market in Qatar

Risk of Foreign Control

Foreign firms that invest in a country generally have vast resources. Therefore, they can have a great influence on the financial market of the host region. For instance, a foreign firm may bring in significant foreign currency to the country to levels that are not accepted. Thus, when many foreign firms that have huge capital investments in Qatar, they may exercise greater control over the financial market of Qatar (Pandya 2014).

Negative Effects on National Security

Too many foreign firms operating in the country may outsource labor from other countries. During this process, the country may be infiltrated by people who conduct malicious activities. The country will therefore be prone to attacks and other forms of insecurity. The people may enter the country as workers of foreign firms (Ramamurti & Hashai 2011).

Drop in Research and Development

FDI may cause local firms to reduce research and development. This is problematic since the majority of the research and development procedures at organizations are responsible for coming up with new products and services that are better than the existing ones. The local firms do not engage in the research activities because they generally leave that task to the foreign firms (Ricken & Malcotsis 2011). Since the majority of foreign firms bring superior products and superior technology, the local firms often lower their efforts to produce new products. This process is very disadvantageous to the country since it results in local firms that do not improve productivity.

Adverse Effects on the Balance of Payments

Despite bringing in capital inflows to the host country, several of the foreign firms may conduct numerous capital outflows to their home country. This results in a situation where there is a debit on the capital account of the host country. Therefore, the government of Qatar should set restrictions on the amount of capital that foreign firms can bring back to their parent companies in their home countries. Moreover, foreign firms can also import numerous inputs from their home countries. This would result in a situation where there is a debit on the current account in Qatar (Siddiqui 2013).

Challenges of investing in Qatar

Policies Governing the Private Sector

The country has numerous policies regarding the private sector. The majority of foreign firms wishing to invest in the private sector. This is because of the numerous advantages associated with the private sector. For instance, the majority of the industries in the private sector have the opportunity to make profits whereas this is obviously impossible in government institutions. Therefore, when there are numerous rules involved in the private sector, some of the foreign firms find it difficult to begin operations in the country. The methods used in privatizing the government-owned industries also have an impact on FDI in the (Vanhonnaeker 2015).

The Small Size of the Domestic Market

The country has a very small population of 1.7 million. Therefore, the market for the products that are produced by foreign firms is small. The firms have to export the majority of their products to foreign countries. However, this challenge is not severe since the citizens of the country are amongst the wealthiest in the world. Therefore, they have sufficient disposable income to buy a sufficient amount of products from the firms.

Major Concerns for Investors

Foreign investors have numerous concerns when they decide to invest in a host country. However, there are four major concerns for the investors that encompass government attitude, political stability, market size, and market potential. This is because the government's attitude will determine numerous regulations regarding foreign direct investment. The majority of the regulations set by a government whose attitude towards FDI is positive will be favorable to the investors. However, a government that does not promote FDI will set numerous strict regulations that will act as obstacles to foreign firms. Therefore, foreign investors will carefully evaluate the attitude of the government of the host country before instigating plans to invest in the country.

Political stability is also a major concern since it determines the safety of the assets and investments of the investors in the host country. For instance, in a country that is not politically stable, chaos may occur at any time. This chaos can be lead to looting and destruction of property. Therefore, investors may lose a considerable amount of property. As a result, the investors would not get a return on their investments. Thus, foreign firms will consider the political environment of the host country before investing there. This could be achieved by observing the outcome of recent elections and the reactions of the citizens after the elections.

Market size is a considerable element since it determines the number of goods that the foreign firms can produce in the host country. When the market size is large, foreign firms can produce numerous amounts of goods and gain a market for all their products. However, when the market size is small, foreign firms cannot produce a lot of goods unless they want to engage in numerous export activities. Therefore, market size is a major concern for foreign investors.

The market potential of the host country determines the buying power of the citizens. A country with adequate market potential has the capacity to grow and the firms can sell more products to the citizens. For example, Qatar has great market potential since the citizens in the country are amongst the wealthiest in the world. As a result, citizens can buy numerous products that include necessities and luxuries. The majority of the foreign firms operating in the region are attracted by this feature. Moreover, other multinational enterprises that have not yet invested in Qatar, may wish to invest in the country as well due to this fact.

Diversification of the Economy

The country is diversifying the economy through several activities like tourism. The country has numerous tourist attractions features such as archaeological sites, beaches, and skyscrapers. However, if tourism is not managed properly, its speedy expansion can lead to a damaging environmental impact in the country. Therefore, Qatar has become more apprehensive about the issues linked with unsustainable tourism. Due to this awareness, there is now growing accord on the need to promote sustainable tourism growth in order to lessen its environmental and socio-economic effects (Chhair & Ung 2014).

The idea of sustainable tourism refers to competently managing tourism procedures in such a way that those economic, social, and aesthetic needs can be met while maintaining cultural integrity, vital ecological procedures, and biological diversity and life support schemes (International Monetary Fund 2007). There are several hidden costs to tourism that can have negative economic effects on Qatar (Drabek & Mavroidis 2013). For example, developed countries are better able to profit from tourism than emerging economies. In spite of the fact that the emerging economies have the most urgent requirements of income, employment, and the rise of the standard of living by means of tourism, they are less likely to realize these benefits. The two main ways in which the host nation fails to benefit from tourism in their respective countries is via the large-scale transfer of revenues out of the host nation and exclusion of local businesses and merchandises.

The direct income for a host country is the amount of tourist expenditure that stays locally after taxes, profits, and wages are paid outside the area, and after imports are purchased (Dunning & Gugler 2007). These subtracted amounts are denoted to as leakages. In numerous all-inclusive package tours, about80 percent of the tourism expenditures go to the airlines, hotels and other international companies that usually have their headquarters in the tourist home countries and not to the host country. Furthermore, a significant amount of income that is retained at the destination nation can leave through import leakages (Dutta & Roy 2009).

This occurs when the tourist requests products that are not available in the host countries. The government imports the products hence spending the money obtained from the tourists to pay for the imports. Sustainable tourism provides options for the host country to benefit economically from the tourism industry. Particularly, the areas with the tourist attraction features are set to benefit from employment and the construction of favorable infrastructure to sustain the tourists. Therefore, Qatar should carefully regulate this activity since it determines the amount of foreign direct investment that is available in the country.

Conclusions and Recommendations

Qatar provides a suitable environment for foreign direct investments. The recent changes made on the regulations of FDI in the country have greatly contributed to the increase in the amount of FDI over the recent past. The majority of the changes have eliminated the trade barriers and allowed more benefits to the country. Even though the country has not yet achieved the expectations, the country has made considerable progress. The FDI has contributed to numerous advantages in the country. FDI reduces the unemployment rate by employing numerous workers. This process has ensured that the majority of the citizens in the country have access to sufficient capital. The foreign firms pay a significant amount of money to the locals that enable them to engage in financial activities that stimulate economic growth.

However, there are several measures that can be taken to ensure that FDI increases in the coming years. First, the political stability of the country should be enhanced. The government should be selected fairly as this procedure is the basis of political stability. When the country is politically stable, economic growth is stimulated. This is because the country's economic activities are not disrupted by political unrest. Economic production obviously comes to a standstill the political environment is not stable. Moreover, the majority of investors consider the political stability of the host country before deciding to invest. This is because they can lose their assets and investments when the political environment is not stable. Therefore, Qatar should enhance its political stability by setting clear transparent forms of governance that will ensure a politically stable environment.

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Privatization should be enhanced in the country. The majority of private industries are efficient and have higher productivity. The private sector provides excellent services which compel the government to improve its services as well. In other words, the private sector enhances competition between industries. The result of this move is a very competitive industry that attracts foreign investors. Moreover, the majority of foreign investors are attracted to high competition since products sell on the basis of quality. The government of Qatar should eliminate the numerous laws governing investment in the private sector. This move would ensure that the investors are attracted to the domestic market of the country.

Mergers and acquisitions should be encouraged by the government. The majority of foreign firms start their businesses without forming any merger with the local firms. However, forming mergers and acquisitions with local firms ensures that foreign firms have access to a wider market, resources, and labor. Moreover, the mergers help foreign firms avoid having to undergo numerous regulations. The investors will also face fewer regulations from the government when they merge with local firms. Besides, mergers and acquisitions ensure that all the stakeholders involved in the process receive more financial rewards. The mergers are a win-win situation for both the host country and foreign investors.

Evaluation and Reflections

This paper attempted to obtain the information needed to address the research questions and research objectives. The research methodology used ensured that the information obtained is relevant and accurate. The Delphi approach method of data collection used professionals with knowledge on FDI and the economy. The method allows professionals to discuss the major factors that are involved in the research. The numerous rounds involved with the approach ensure that the most relevant factors are obtained from the data collection. The research has also used a sufficient sample of sixty respondents. This move helps to lower the bias and hence increase the validity of the research.

The literature part provided details on the current regulations of FDI in the country. This discussion is effective since it offers insight into the investment environment in the country. The majority of the rules regarding FDI have been evaluated for their effectiveness in this section. The literature also discussed the economic structure and economic forecast, which is important because it provides details on why foreign investors may be attracted to the country. The data collected in the research has been analyzed by SPSS.

This software is very effective since it utilizes many tools of analysis. The charts and graphs that were presented were obtained using this software. The discussion section evaluated the objectives and research questions. This section involved conducting a comprehensive discussion of the research questions. The conclusion chapter provided relevant recommendations that can be used to address the challenges of the research topic.

Ultimately, the paper has employed techniques in all the sections. This move ensured that the data obtained is reliable. Moreover, the techniques employed have increased the validity of the study. When the pertinent authorities involved with foreign direct investment adopt the recommendations provided by the paper, FDI in Qatar will significantly improve.

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