As the federal state of Iraq transitions from being under the supervision of the US-led Coalition Provision Authority to autonomy, the question of what will happen to the Federal Iraqi government in terms of social and economic dimensions persists (Coalition Provisional Authority, 2004). The situation is made more interesting by the fact that the Iraqi economy is still dependent on oil (Iraq Directory, 2007). In a report from the US Energy Information Administration, Iraq holds the second largest proven oil reserves amounting to 112 billion barrels (Iraq Directory, 2007).
Other research estimates that reserves are at a much higher figure (Verma, 2008). There is the possibility that there are as many as 350 billion barrels of oil in undiscovered reserves (Verma, 2008). Petroleum exports still account for about 95% of the total exports of Iraq (Central Intelligence Agency, 2008), and the eight-year war of Iraq against Iran in the 1980s is said to have resulted in economic losses of about USD 80 billion (CIA, 2008). As well as the loss of revenue, the war severely impacted on the country’s petroleum production facilities (CIA, 2008).
This, coupled with the economic sanctions imposed on the country after its defeat in the Gulf War, left Iraq in economic shambles (CIA, 2008). However, it is said that, today, Iraq is slowly getting back on its feet, and despite the seemingly dire illustrations that are portrayed in the media, GDP growth in 2006 was estimated to be at 13% (CIA, 2008). Statement of the Problem The problem to be addressed in this study is the overcome the lack of research regarding the effects of the FDIs in the region of Iraq and Kurdistan and their effects on the unemployment rate and the national GD growth.
Historically speaking, Iraq had been experiencing several economic setbacks, resulting to the reluctance of foreign investors from getting through the country. The problem is that although Iraq is dependent on FDI and LI investments to shift to a market-based economy, there is no measurement to indicate whether the influx of Foreign Direct Investment and Local Investment will have a positive or negative effect, resulting in economic uncertainty. This is another major issue that this research is directed towards resolving, since these regions need a definite answer to the effects of the FDI and LI investments.
Major economic reconstruction reforms of the first post-conflict permanent government of Iraq are directed towards shifting the economy to market-based economy, encouraging more competition and, thus, investments from foreign and local businessmen. The research is being conducted because even thought Iraq is dependent on FDI and LI investments to shift its economy to being market-based, there is no measure of whether the influx of Foreign Direct Investment and Local Investment will have a positive or negative effect.
Thus, there is a need to find out whether Iraq’s economy will expand with the influx of Foreign Direct Investments and Local Investments. This research also focuses on finding the above mentioned element. Purpose of the Study The purpose of this mixed method study is to explore whether or not there have been foreign direct investments and local investments in Iraq, and if so, whether they have positively affected or negatively effected the Iraqi economy.
The research will determine the effects of the FDI and LI investment shifts on the unemployment rate and the national GDP growth to determine the nature of their effects. Considering the differing speculations on this topic, it would be essential that the particular case of Iraq be studied to provide a better understanding on what is taking place in the Iraqi economy. This study also aims to identify the underlying reasons why or why not Iraq is a great potential for foreign investors and other business opportunities. Assumptions cannot be made that claim FDIs and LIs affect economies in a positively.
This study will examine closely how FDIs and LIs impact the Iraqi economy to determine whether or not the influx of FDIs and LIs is positive or negative. This absence of the ability to generalize the effects of FDIs and LIs will be addressed in this study. Moreover, theories and concepts are provided for the basis and framework of this research study. Quantitative research is defined as the numerical representation and manipulation of observations for the purpose of describing and explaining the phenomena that those observations reflect (Babbie, 1995).
Qualitative research described as the non-numerical examination and interpretation of observations, for the purpose of discovering underlying meanings and patterns or relationships (Babbie, 1995). Mixed Method research includes both quantitative and qualitative research. The quantitative research method employed would be focus group studies, which will involve participants who belong to the financial field and have insights about the effects of the changes in the FDI and LI after United States intervention.
A few interviews will also be conducted from experts who have been dealing with the financial sector and the changes and effects that they have noticed in the financial sector after US intervention. The qualitative method used will be studies from previous researchers and reports which provide financial data, as this area of research cannot be done by conducting surveys of normal end consumers. By employing both of these methods the research will contain a primary as well as secondary research approach.
However, the effects on unemployment rate would be determined by surveying individuals and will be correlated to the other findings. The specific population of the proposed study is 500 to 1000 individuals in main providence of Iraq and Kurdistan Region and from area of control between Kurdistan Regional Government (KRG) and Baghdad government. The geographic location of the study is Iraq and Kurdistan region. Research Questions The problem of studying the trends and effects of FDI and LI investments into Iraq since 2003 may be explored and examined in several questions that each focus on a specific aspect of the exploration.
The initial questions will be answered by methods that are quantitative in nature. The trends are the first focus, and then the study will look at where the investments were disbursed, and how those industries have fared so far. The questions then will move to explore the relationship between those investments and the elements of the economy. Lastly, the focus moves to the social effects of these investments. Q1: Is there a relationship between the amount of FDI entering Iraq and the unemployment rate?
Q2: What is the extent of the relationship between the amount of FDI entering Iraq and the unemployment rate? Q2: What is the extent of the relationship between the amount of LI entering Iraq and the unemployment rate? Q3: What is the extent of the relationship between the amount of FDI entering the country and national GDP growth? Q4: What is the extent of the relationship between the amount of LI infused into the economy and national GDP growth? Q5: What are the perceptions of Iraqi business leaders regarding the infusion of FDIs and LIs into businesses in Iraq?