Strategies for attracting foreign investments and their obstacles in industrial development from the perspective of investors and employees of Arvand Free Zone

Master's thesis field: Business Management

Treatment: International Marketing 

Academic year: 1391-1390

Abstract:

This research aims to investigate investment attraction strategies and its obstacles in industrial development from the perspective of investors and employees of Arvand Free Zone. In this research, investment means the possibility of investment by both groups of domestic and foreign investors, and the meaning of Obstacles to attracting investment are any factor that negatively affects the process of formation and development of investment in Arvand Free Zone. As it can be seen that the action of investors to invest depends on the existence of conditions and assumptions, until the necessary conditions are not provided, investment will not take place. In this study, the results indicate the positive effect of the development and improvement of financial systems on the increase of investment attraction. The index of membership in the World Trade Organization is also positive. The independent variable Economic development has a positive effect. The variable of laws and regulations has a direct relationship with the attraction of investment, while successive changes and the lack of clarity of laws and regulations have a negative effect. The lack of proper introduction of the benefits of investment is also raised as another obstacle. The negative effect of weakness in infrastructure facilities and appropriate services on the attraction of foreign direct investment is evident in the research. FDI attraction, we will provide the necessary solutions in order to strengthen the policy, institutional and legal framework of FDI attraction and remove related obstacles in the Arvand Free Zone.

Key words: investment, Arvand Free Zone, development and improvement of the financial system, World Trade Organization, economic liberalization

Chapter 1

Overview of the research

-1 Introduction:

What In the current situation, in relation to the general characteristics of our country, it can be said that the demographic composition of the country is young. Therefore, such a society needs written and detailed plans to achieve the gates of economic development in order to meet the needs of the society in the future. The ever-increasing knowledge and technological developments have also been a reason to keep up with the process of development and expansion of communication with other nations of the world, and to minimize the gaps. Now, how should we face such a situation? Should we close our eyes to developments and ignore the experiences that others have gained and try to test them again, or use past experiences to find new discoveries? It is clear that we need principled and rational investments to adapt to the new economic conditions of the world. Although the country is very rich and wealthy in terms of natural and mineral resources, thanks to the Almighty God, but most of the facilities are potential, which must be done with labor and Planning should be well identified and exploited by technical experts. One of the ways to achieve this goal is to attract and attract foreign capital and use the resulting technical and technical possibilities that can flourish these resources and economic facilities. Of course, the attraction of such capital requires special tools and facilities so that this floating flow of capital in the world is directed towards it.   

Creating attraction for the movement of capital towards the country requires tools. One of them, which has been used in most developed or developing countries today, is the creation of free zones.The attractions that these areas can have for foreigners are: labor  and abundant and cheap natural resources, ability to transfer capital and profits inside and outside, guarantee of ownership and investment, elimination of administrative and customs formalities, elimination of customs and tax tariffs, facilities such as storage for re-transfer of goods, communication and telecommunication facilities and facilities, as well as ease of access to transportation services, banking and insurance services, as well as access to consumer markets and other factors that we will discuss in detail [1] in Islamic Iran. Simultaneously with the implementation of the country's first five-year economic, social and cultural development plan, the creation of industrial and commercial free zones was placed on the government's agenda. Iran is located in the Souq-e-Jishi region of the Middle East, at the shortest distance from the newly independent republics of the former Soviet Union and the countries of the ECO (Economic Cooperation Organization) region, and is almost at the center of a market with a population of 360 million people. It is located in the center of the Silk Road (trade route from East Asia to Western Europe) and in the middle of the distance between the Middle East and North Africa to Central Asia and Transcaucasia. Therefore, investors in Iran's commercial-industrial free zones are faced with a safe and accessible market.

However, Iranian free commercial-industrial zones are faced with various problems such as changes in laws and regulations, lack of infrastructure facilities in terms of investment restrictions in these matters, etc.

Therefore, it is necessary for the country's economic planners and policymakers to take action as soon as possible to remove the obstacles to the work of free zones. Failure to do so will cause free zones to become a passageway for the import of goods and not only fail to achieve their main goals, but also undermine national economic policies, especially in the foreign trade sector, and promote illegal activities (goods smuggling), which can be a terrible blow to the domestic economy[2].

1-2  Statement of the main problem of the research:

Foreign direct investment [3] has undeniable effects on the economy and the prosperity of science and technology, in addition to the creation of development infrastructure and job positions in the host [4] or attracting country [5].

One of the ways that was considered by the economic planners and policymakers of developing countries to attract foreign investment and technology transfer is the formation of industrial free trade zones.

Given that simultaneously with the implementation of the first five-year economic, social and cultural development program of the country, the creation of free trade zones– An industry was placed on the agenda of the government and as it can be seen that the action of investors to invest depends on the existence of conditions and presuppositions, until the necessary conditions are not provided, investment will not take place, therefore, the lack or absence of a number of effective factors in investment that are desired and liked by investors are obstacles in the way of attracting capital[6]. Investments are especially in the free zone of Arvand. There are major differences in terms of investment conditions, the feeling of security of capital, and also the type of obstacles in this region compared to other free trade zones of the country, which can be pointed to the conditions and atmosphere of insecurity and security prevailing in the country of Iraq in the neighborhood of this area, the failure of the cities of Khorramshahr and Abadan to leave the remaining conditions of the war.

The dependent variable in this research is foreign direct investment.

Independent variable: This variable positively or negatively affects the dependent variable [7].

The independent variables in this research include the following:

1- Development and improvement of financial systems (foreign banking and insurance) in this region

2- Membership in the World Trade Organization

3- Economic liberalization

4- Laws and regulations of free zones

5- Proper introduction of investment benefits

6- Appropriate infrastructure facilities and services

1-3 The importance and necessity of conducting research:

In rooting the causes and factors of the lack of growth and backwardness of countries and tracing the fields related to economic and social disturbances such as the instability of economic and social indicators The low gross national income, inflation, unemployment, the existence of general poverty, etc., this fact can be clearly observed, that the involved countries suffer more than anything from the problem of attracting capital and the inability to equip their capital.