Review of Theoretical Models in the Field of Foreign Direct Investment (FDI) and Proposal of a Development Model Suitable for Iran

Abstract

The aim of this research is to examine the theoretical models in the field of Foreign Direct Investment (FDI) and to propose a development model suitable for Iran. The research method is descriptive-analytical. The materials and data are qualitative, and data collection was conducted through note-taking. The analysis of the FDI situation in Iran indicates that these investments have been influenced by political and economic factors over different periods, ranging from the plundering of national resources in the first period (before 1931) to the reduced willingness of investors following the nationalization of the oil industry and the sharp decline in investments after the Islamic Revolution. Following the approval of incentive laws after 1993, Iran reached a turning point in attracting Foreign Direct Investment (FDI), but has not yet achieved significant successes in this area. On the other hand, in the effort to identify the optimal model for Iran, Peter Evans' theory was found to be the most compatible 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 stewardship and ownership, which all governments perform, in addition to the roles of enabling and nurturing, which were analyzed in the context of Iran. According to the results, attracting FDI requires stability in macroeconomic variables, improvement of the business environment, provision of appropriate regulations for a transparent tax system, banking, insurance, and privatization, enhancement of customs processes, formulation of facilitating legal and economic regulations for attracting foreign investment, along with the development of targeted development strategies focusing on areas with comparative advantages and value chains, including oil, energy, and petrochemicals.