Examining Theoretical Models in Foreign Direct Investment (FDI) and Proposing a Development Model Suitable for Iran

Abstract

The aim of this research is to examine theoretical models in the field of Foreign Direct Investment (FDI) and propose a development model appropriate for Iran. The research method is descriptive-analytical. The materials and data are qualitative, and content extraction was used for data collection. The analysis of FDI in Iran shows that these investments have been influenced by political and economic factors, ranging from the exploitation of national resources in the first period (before 1931), to the decline in investor interest after the nationalization of the oil industry, and the sharp reduction in investments after the Islamic Revolution. Following the approval of incentive laws after 1993, Iran reached a turning point in attracting FDI; however, significant successes in this area have not been achieved yet. On the other hand, in efforts to identify the optimal model for Iran, Peter Evans' theory was found to be most consistent with the country's conditions. This theory emphasizes the multiple roles that the government can play in this regard and defines four key roles for the government. These roles include governance and administration, which all governments perform, as well as the roles of facilitation and nurturing, which were analyzed in light of Iran's conditions. According to the results, attracting FDI requires stability in macroeconomic variables, improving the business environment, providing appropriate regulations for a transparent tax system, banking, insurance, privatization, and improving customs processes. Additionally, formulating legal and economic regulations that facilitate foreign investment, alongside developing targeted development strategies focused on areas with comparative advantages and value chains, such as oil, energy, and petrochemicals, is essential.