Bahrain major FDI destination
Manama, August 11, 2007
Foreign direct investment (FDI) in Bahrain is double the value of overseas investments held by Bahrainis, according to figures in a new report published by the Dubai Chamber of Commerce and Industry (DCCI).
The report, Foreign Direct Investment and GCC Countries, also reveals Bahrain led the Gulf in terms of FDI as a percentage of gross fixed capital investment (GFCF) from 1997 to last year, and along with Qatar and the UAE the country is considered an FDI success story with high potential to attract further investment.
The importance of FDI is underlined by the report's authors, who note FDI modern skills and technology to countries as well as investment.
'FDI brings about improvements in technology, efficiency and productivity and these in turn stimulate economic growth,' said the report.
'In this view the contribution of FDI to growth comes through the transfer of technology and management practices from the developed to developing economies.'
From 2003 to last year, the stock of inward FDI as a ratio of the stock outward FDI was five for Qatar, four for the UAE, two for Bahrain, and 0.20 for Kuwait.
'These ratios show that Qatar, the UAE and Bahrain have more inward FDI stock by foreigners than their nationals outward FDI stock in foreign countries,' the reports authors note.
'Bahrain, Qatar and the UAE are classified as front-runners, that is countries with both high FDI potential and high actual performance. Kuwait, Oman, and Saudi Arabia are classified as below potential, that is, countries with high FDI potential but low actual performance.'
Bahrain leads the field when it comes to FDI as a percentage of GFCF - with the former accounting for 31 per cent of the latter.
That puts Bahrain ahead of Qatar on 26 per cent, the UAE on 17 per cent and Kuwait on less than 1 per cent.
However there is no room for complacency, as the DCCI report explains, with the UAE closing the gap.
'Figures show that Bahrain and Qatar were outperforming the UAE from 1997 to 2003, but the UAE has been outperforming both Bahrain and Qatar since 2004,' it says.
'In order to better document the role of both inward and outward FDI the report recommends GCC governments set up specialised databases that 'meticulously record all of the FDI flows in and out the GCC.'