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Jannette Esguerra
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-- Study Highlights Foreign Direct Investment in Emerging Markets --

WASHINGTON, D.C., June 8, 1998 ---The International Finance Corporation today released the Arabic-language edition of "Foreign Direct Investment." The study reviews the interaction between policy frameworks and the volume and performance of foreign direct investment (FDI).  This is the fifth volume of IFC’s "Lessons of Experience" series of studies which draw on IFC’s experience as an investor and policy advisor in emerging markets.

The IFC study finds that FDI flows are not easy to attract; nor do all foreign investments lead to profitable enterprises.  It also says that a sound policy framework -- one that holds few restrictions on foreign ownership, a liberal trade and payments regime, open access to land and labor, low and uniform taxes, limited public sector involvement in the economy, and minimum red tape -- is key to capturing foreign investor interest and to successful investments.  The study concludes that with sound policies even those countries considered risky by investors can attract FDI flows.

In 1996, Morocco, Tunisia, and Egypt attracted most of the FDI flows to the Middle East and North Africa region.  However, the study notes that FDI in the region remains low at six percent of the total flows to developing countries, which amounted to US$706.3 billion in 1996.

Publication of this study in Arabic is intended to better inform the Arabic-speaking business community and build greater awareness of IFC’s products and services.

The study was written by Dale Weigel of the Foreign Investment Advisory Service (FIAS) and Neil Gregory and Dileep Wagle of IFC’s Corporate Planning Department.  Previous studies in the series include papers on IFC’s experience with privatization, leasing, investment funds, and financing infrastructure.

Established in 1989, FIAS is a joint service of IFC and the World Bank, which advises developing countries on policies to promote FD.  IFC, part of the World Bank Group, fosters growth in the developing world and in emerging economies by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.