Dynamics of Foreign Investments of the Islamic Republic of Iran

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Mohsen Heydari, Toros Torosyan

Abstract

Based on the Dynamics of foreign investments of the Islamic Republic of Iran, the flow of investments from Asian countries into Iran has increased since 2008, but the volume of Asian investments is still significantly below that of European countries. The investments made by the Islamic Republic of Iran in the Republic of Armenia during the mentioned period were on average equivalent to only 1% of the outflows of foreign direct investments of the Islamic Republic of Iran, which is a very low index. By the econometric analysis, the effect of these laws on the FDI inflows analyzed. To this end, we have developed a regression equation that shows the impact of the Islamic Republic of Iran's GDP on the foreign direct investment inflows and the effect of these laws and legal documents on the investment climate. For the analysis, the closed data on GDP in quarterly periods of 2001-2014 in USD, dummy variable X1 indicating the existence of law, legal instrument and international contract concluded to improve the investment climate: X1 , including the FIPPA, and also tax treaties and reforms in terms of cross-tax exemptions are used. The number of observations is 56. The data analysis will be performed with EViews 7 software and the least squares used. Result show that the GDP growth changes by one unit, foreign direct investment grows by 4.52 units. The adoption of the investment area adjustment at the same time period will lead to a decline in FDI growth by 0.49 units. The FDI growth increased 0.14 units as a result of laws passed in the last quarter. The increase rate has been 0.47% in the second quarter, 1.75% in the third quarter and 0.23% in the fourth quarter. Investments made by the Islamic Republic of Iran in the Republic of Armenia are essentially random and do not follow any rules.

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