Qatar is second in the GCC region and 38th globally in the "2020 Milken Institute Global Opportunity Index", which considers economic and financial factors that influence foreign investment activities, as well as business, legal, and regulatory policies that governments use to drive investment.
The GOI assesses some 146 countries in five categories, including 1) business perception; 2) financial services; 3) institutional framework; 4) economic fundamentals; and 5) international standards and policy.
In their analysis, the authors note the significant progress made to date and the growing prominence of Gulf Co-operation Council countries among investors. For example, they point to the inclusion of Kuwait and Qatar in leading emerging market indices.
“This trend will help spotlight the region to global investors and funds,” they write. “However, the inclusion in these global indices means extra scrutiny from investors and new challenges … especially information disclosure,” said the authors of the Milken Institute report.
Claude Lopez and Joseph Bendix, authors of the report, examined regional trends and data that compare GCC nations to upper-middle-income countries. They found that GCC countries compare favourably in several areas, including the cost of opening a business, the burden of labour regulation and taxes, the age and health of the working population, among others.
“However, serious deficiencies exist in policies that ensure the protection of the investor—including the recovery and resolution process—and transparency regarding the quality and quantity of information available.
“The over-arching goal of these national plans is to diversify the economy away from oil by modernising the legislative framework and enhancing the business environment of the region,” the authors write, noting, “The credibility of these economic roadmaps, especially in the eyes of international investors, lies in their implementation.”
The Milken Institute analysis shows that when assessing economic development, the GCC countries compare well with the upper-middle-income countries group. That is especially in the cost of opening a business, the burden of labour regulation and taxes, the age and health of the working population, and the efficiency of the legal systems.
By contrast, investor protections, including the recovery and resolution process and investors' rights, the access to information regarding the public and private sectors, the skill levels and qualifications of the labour force, and economic openness, including trade agreements and tariffs, align more with lower-middle-income countries.
Independent of the level of their natural resources, the GCC countries have invested a lot of time and energy in attracting FDI over the past decade.
Most of them have even adopted standalone FDI legislation. In addition, many of the GCC countries have been facilitating foreign ownership across different sectors as a strategy to encourage economic diversification.
These reforms have contributed to the diversification of the GCC economies; most of the GCC countries export a more diversified set of products than in 2000.
“Yet, this diversification remains mostly vertical, concentrated in the standard petrochemicals and energy-intensive segments, such as steel and aluminum,” Milken Institute said.
