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Supporting Investment Policy and Governance Reforms in Iraq

image of Supporting Investment Policy and Governance Reforms in Iraq

This publication reviews measures taken to support investment policy and governance reforms in Iraq.  It finds that Iraqi parliamentary elections, held without major security incidents in March 2010, are the latest in a series of indicators suggesting that the country may be achieving greater stability in governance and security - a key prerequisite for foreign and domestic investment, growth and job creation. Furthermore, the business environment is gradually improving as a result of an ongoing institutional capacity building process supported by the international community.

The MENA-OECD Initiative on Governance and Investment for Development is part of this effort, playing a key role in building the capacity of the National Investment Commission and its one-stop shop for investment licensing. The Initiative has helped raise awareness on corruption and bribery issues, provided training for the negotiators of international agreements, and advised on implementing regulations for the landmark Investment Law of 2006. This publication examines these issues, and MENA-OECD involvement in advancing them, for the period 2007-2008.

English

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Introduction

The challenges ahead for Iraq in managing economic recovery and implementing governance reforms remain considerable. While security improvements and increased oil revenues allowed economic reconstruction to take a substantial step forward over the period 2007-2008, there are still many concerns regarding the country’s future, particularly in fields such as security, infrastructure, electricity production and distribution, water and fuel supply, and telecommunications. High unemployment rates remain a source of urgent concern. Reforms in governance have allowed a relative rehabilitation of Iraqi institutions and progress in the rebuilding of the state, but this process must be further consolidated. At the economic level, challenges remain numerous, with investments remaining modest due to persistent political uncertainties. The decline of oil prices since 2008 has forced the Government of Iraq (GoI) to reduce its budget for reconstruction plans, and that, combined with the failing state of the country’s oil infrastructure, is likely to prolong severe financial problems, impairing the capacity of the GoI to implement its ambitious agenda. Also, as the United Nations Conference on Trade and Development’s (UNCTAD) 2008 World Investment Report emphasises, FDI inflows into Iraq have remained low – USD 448 million in 2007 – and are directed mainly at oil and petrochemical investment projects.* They have, in fact, been lower than in any of the neighbouring MENA countries apart from Kuwait.

English

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