The Economic & Investment Status in Iraq and Basra City: S - 2011 Journal of Kerbala University, Vol.9. No.4. Humainie
The Economic & Investment Status in Iraq and Basra City: S - 2011 Journal of Kerbala University, Vol.9. No.4. Humainie
The Economic & Investment Status in Iraq and Basra City: S - 2011 Journal of Kerbala University, Vol.9. No.4. Humainie
2011
Abstract
Iraq tries heavily to get rid of the problems of the last economic regime ,which had a great
effects on the economics route ,such as unemployment ,debts and destruction in every systems
and industries .The wars deepen that destruction especially the last war that change the system.
Iraq tries to bring up economic reforms and going toward the economic market and encourage the
private sector . Of course that could be done by improving the basis or the infrastructure of its
economy .That will need capitals and money to construct and reform the economy .Therefore ,it
started with legislation of code of investment No.13 ,2006 and then made some amendment for
that code in order to make it suitable with real life and attracts foreign investment .Also there was
a try to spread the security and politics stability and try to put an end to smuggling and financial
and managerial corruption .Therefore ,Iraq developed its security forces and concentrates to
develop the economic sectors especially oil production ,industry , and agriculture showing the
suitable opportunities in those sectors.
All this to show the positive image for Iraq .Therefore there are investment commission
established in every city of Iraq to carry out the investment affairs and show the suitable
opportunities to invest .In field of labor force and human resources ,work is still going on to find
jobs to people to get rid of unemployment .Therefore in the last budget of 2010 , more than
thousands of jobs are devoted .Besides ,there are many centers for training people .All these a
trying to improve the infrastructure of the country in order to attract the investment either they are
local or foreign .I think that if Iraq could get rid of corruption ,make laws easy (one window) and
spread security stability .That of course will lead to make investment possible and with natural
resources that will make success of economy .
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And despite that ,the three factors of production ; labor, capital, and land ,representing the
essential factors to attain the production ,but the capital has the great attention as a factor to attain
the production process and growth rate.
This importance of investment and its effect on growth rate depends mostly on the
efficiency of investment that connecting with the multiplier, which shows that any increasing in the
investment will lead to multi increases in the association investment that connection with initial
investment. Also ,it will lead to multi increasing in the income(1).
This changes in real life is not clear because the limitations of investment climate differ from
country to other and from region to another region .That is due to establishing from many constrains
and limitations which activated with each other's and giving the sign of the success or
failure.Therfore Saudi Arabia adopting clear policies to attract foreign investment and putting a lot
of motivations and facilities .On other hand ,Debue and Bahrain did the same which considered to
be the success example in this scope. From studying the status of foreign investment in Arab world
shows that the motive to attract investment may succeed in this region while is not succeed in other
region .In the middle of this , the politicians and economists decide that the investment climate must
complete its limitation in order to attract the investments . From this came the hypothesis which
shows what will incite the foreign investment to flow to this country and that one . Iraq and other
countries know very well that attracting the investment depends on the creation of suitable climate .
2) The status of the Iraqi economy :
There is an argument and no acceptation among economists about the relationship between
foreign investment and economic growth .Therefore it should be studied the economic environment
of Iraq ,in order to create investment and attract it ,and to show whether the Iraqi environment
suitable to attract those investment .The availability of success factors will form the good climate
for investment which the foreign investor demanded .That can be discussed from studying the
economic status of Iraq through the following factors :
2.1. The security and political stability and risk :
One of the most important factors ,that contribute in entering and attracting investments to
country is the availability of the security and politic stability .If the conditions are not stable ,that
means,the foreign investment will not enter the country ,because the future of invested money will
be unknown .That is due to the stability of security .Iraq ,from the available information shows that
one dollar from five dollars that spent on the economic reforms spent on the security stability
.Besides , the unstability of security need to spend a great sum of money .Besides ,security stability
means not only politic but also stability of financial security which represented in creating banks
work on new technology to secure the deposited money and connection with the international Banks
and financial institutions .
It seems that the majority of economists agree that the stability of politic and security in
any country is one of the fundamental factor to attract the investments .
Here we must discuss the relationship between investment and risks, because the most
important economic factor is the yield of investment and degree of risk that the investment faces
.Therefore the comparison between the revenues that the investor expecting and the risk degree
which means uncertainty especially when there is no security .
It is known that investment environment in Iraq and the developing countries described that
they are uncertainty in their work .That of course ,will increase the degree of risk .That will make
that foreign investors look at a great yield in countries declining the degree of risk in them and that
will rise the security degree .The majority of studies that taking into consideration the utility of
investment , refer to the risk that associate with the investment process appeared as a result of
1) Ahmad Zaki Syam .Investment Principles , Dar Al Manhaj for publishing and distribution ,Aman
,Jordan ,1997,P.10.,Aman ,Jordan ,!997,P.10.
1) O.P.cit.P.23.
2( Lionel Beehner" Economic Doldrums in Iraq " ,june 20,2007 .N.Y.CFR.org.P.12
GDP
3.66
0.57
5.10
18.72
28.98
2.60
-15.0
3.81
5.47
1.76
19.87
4.92
Labor force
2.58
0.30
1.47
6.64
12.02
1.02
1.25
2.52
4.32
1.01
12.69
3.01
Productivity
1.08
0.27
3.46
2.07
16.96
1.59
-16.25
1.29
1.16
0.75
7.18
1.91
Source : Ministry of planning and developing cooperation ,sector of human development ,unemployment and
employment ,Baghdad 2009 ,P.16
In year 2008,and after the increase in the oil revenues which affected the standards of living
and led to raise them ,that has led to develop the economic activity .Of course ,the government went
on creating jobs for about 250.000 unemployed .But as a result of decreasing the oil price from 100
dollars to about 40 dollars ,the government decreased the employment that has led to increase the
unemployment rate again (1) .The results of unemployment through the period 2003-2007 shows that
there were a decline in the size of unemployment .Its withdrawn from 28.1 percent to 17.5 percent
.Nevertheless ,these rates still high if they would compare with rates of 1990 which the rate was 7.1
percent .Also the economic activity decreased from 41 percent in 2003 to 34 percent in 2007 (2) .
2.6.The trade sector
Trade sector represents the important sector from its role in development process, because
the development process needs capital goods to reform and contract the production capacities .The
importance of trade can be measured from the indicator of economic openness degree on the world
.The percentage of this indicator was 124.56 percent in Iraq in 2007 .The increasing of this indicator
refer to the depending of the Iraq economy on the external markets to get the economics needs from
goods .That is of course means the dependency on the world to provide Iraq with different goods
and any change in prices ,economic and financial policies will affect Iraq economy .Therefore ,the
oil export was about 96 percent while the other exports was 4 percent .See table (5).
Percentage
of annually
increase
38.2
165.00
7.5
40.8
Table (5)
Iraqi exports oil and nonoil 2007
Percentage
2007
Percentage
2006
of exports to
Dollars
of export to
dollars
total
total
95.79
39530.64
97.44
28609.96
3.79
1564.90
2.01
590.62
0.42
172.36
0.55
160.30
100
41267.90
100
29360,80
Year
goods
Oil
Oil products
Other goods
total
Resources :
1- Dr.Ahmed Z.Seum, "Principles of Investment",Dar Al-Manhaj ,Oman 1997.
2- Adnan M. Hassan ,"The efficiency of monetary policyand its role in economic stability in
Iraq ,period 1991-2006",Ph.D thesis ,Basra 2009.
3- Frank R.Gunter ,Liberate Iraq's Economy ,N.Y.Newspaper ,Nov.16,2009.
4- Iraq Center for Investment and studies , Basra ,Economic Resources in Basra, 2006.
5- Dr. Kadhim J. Al eesawy ,"The economic feasibility and evaluation projects "",Dar AlManhaj ,Oman,2005.\
6- Lionel Beehner" Economic Doldrums in Iraq " ,june 20,2007 .N.Y.CFR.org.
7- Ministry of planning and development cooperation commission of human development
,Baghdad 2009
8- Ministry of planning ,Central statistical indicators of trade, Baghdad www.cosit.gov.iq.
9- Dr.Nadwa H. Joda,"Analze the poverty directions in Iraq ,period 1996-2003",Ph.D thesis
,Basra 2006.
10- World Bank Group , Doing Business 2008, Iraq ,Washington 2008.
11- International Transparency organization indicators of corruption .www.transparency.org.
12- project of local government RTI" Total statistical survey for Basra 2007" ,Basra 2007
1 (Ministry of planning ,Central statistical organization ,Annual statistical abstract 2007 Baghdad
,p.69.
2
( project of local government RTI" Total statistical survey for Basra 2007" ,Basra 2007 .