Foreign Direct Investment (FDI) in OIC: Factors Influencing, Challenges and Strategies for Future

Abstract

This conceptual paper investigates into the complicated landscape of foreign direct investment (FDI) in the Organization of Islamic Cooperation (OIC) countries. Given the diverse economic, political, and social fabric of the OIC member states, FDI inflows exhibit substantial variability across these countries. We start by exposing the factors influencing FDI, ranging from macro-economic and market size, regulatory frameworks to political stability and diplomatic relations. Despite the promise held by these nations, several challenges persist. These include, but are not limited to, political unpredictability, infrastructural deficits, and sometimes, restrictive regulatory landscapes. Recognizing these barriers, the study proposes forward-looking strategies for OIC countries. Besides of barriers, some success stories were highlighted as an example of good practices. Digesting the barrier and good practices, some strategies were suggested to boost the FDI inflows into the region. Emphasis is placed on enhancing institutional quality, fostering a conducive business environment, leveraging technological advancements, and amplifying intra-OIC collaborations. The paper concludes with highlights for policy maker and investors the potential of OIC countries to attract more significant FDI by harmonizing their policies and collectively positioning themselves in the global market, while also respecting their unique cultural and socio-political contexts.