Economic development in Yemen and Foreign Direct Investment

National Yemen

Majed AL-Dhelee

BY Majed AL-Dhelee, for National Yemen

Foreign Direct Investment (FDI) becomes a central player in the world economy and this fact has been approved by numerous economists, as there is a very decisive link between foreign direct investment as well as economic development in the level of developed and developing countries. According to the world investment report issued by (UNCTAD) in 2013, global foreign direct investment has reached 1.35 trillion of US dollar in 2012. Also it is estimated that FDI flows may then reach 1.6 trillion of US dollar in 2014 and 1.8 trillion of US dollar in 2015.

Foreign direct investment is an important way to enhance economic efficiency and encourage long-run economic growth. Also it could afford several economic benefits such as generating employment opportunities, boosting sales and government tax revenues and inducing the trade by enhancing the competitiveness of local products and increase the export volume. Additionally, allow technology transfer and management techniques to the host country.

Many developed and developing countries realized the importance of attracting foreign direct investment and rushed to pull him. South Korea is an a good example in attracting foreign direct investment. Though, Korea until 1997 was one of the worst countries in the world in attracting foreign direct investment, but now Korea has become a popular destination for multinational companies and the Korean government succeed to attract foreign direct investment estimated by 120.297 billion of US dollars from 1997 to 2012.

Yemen as a developing country is in urgent need for a foreign direct investment, especially that a country has strategic location which connect Asia with Africa continent, and huge of goods a crossing on a daily basis from Bab El Mandeb to various countries around the world. In the base of natural resources the country is reach with several resources such as gas, oil, minerals, agricultural land, tourism, fisheries enormous. Also, cheap labor and abundant of government incentives for investors such as tax holidays, customs exemptions, and free lands.

Despite these concessions, Yemen is still suffering from several economic problems, and the sluggish of foreign direct investment inflows is one of important problem which need urgent solation. There are many problems government must be resolved, like finding a safe environment for investment. The state must take control of all the country and eliminate all terrorist groups which destroy the image of the country and end armed manifestations. The image of the country should be changed to a positive in the international media by proving political stability. In terms of domestic reforms there are still many problems which investors are claiming such as the routine in government institutions with weak managerial rules, and investment incentives still not much the desire of investors in some economic sectors. However, Yemen among other countries in West Asia region still suffers from relatively abysmal and disappointing record of FDI.

In conclusion, without proving a political stability, and reforms in the deferent sectors of the economy, Yemen will be a worst place for attracting foreign direct investment in the region of West Asia, which put the a country in isolation from the world, and increasing the economic difficulties.

Majed AL-Dhelee, is a Master Student at Graduate School of Pan-Pacific International Studies (GSP), Global Campus. Kyung Hee University. Suwon City, Republic of Korea