Determinants of Foreign Direct Investment in the GCC: Evidence from the UAE’s Sustained Attractiveness

Abstract

Foreign Direct Investment (FDI) plays a critical role in promoting economic growth, technological diffusion, and structural transformation, particularly in developing and resource-dependent economies. Within the Gulf Cooperation Council (GCC), member states have undertaken extensive reforms to attract foreign investment; however, FDI inflows remain unevenly distributed across the region. This study examines the key determinants of FDI attractiveness in the GCC with specific evidence from the United Arab Emirates (UAE), which has consistently emerged as the region’s leading FDI destination. Using secondary data from authoritative international and regional sources for the period 2020–2024, the study evaluates GCC countries across multiple dimensions, including global competitiveness, market size, economic growth, technology adoption, innovation, digital competitiveness, regulatory quality, talent attraction, and fiscal incentives. The findings indicate that while several GCC economies perform strongly on individual indicators, the UAE distinguishes itself through a unique and sustained combination of economic performance, advanced digital and innovation ecosystems, investor-friendly institutions, and fiscal competitiveness.  The study contributes to the FDI literature by providing a holistic, comparative assessment of FDI determinants within the GCC and by demonstrating how an integrated policy approach enables the UAE to sustain its attractiveness in an increasingly competitive global investment environment. The findings offer policymakers and investors valuable insights into understanding and replicating successful FDI strategies in the region.