Analysis of the Impact of Fiscal Policy Instruments on Foreign Direct Investment in Iraq for the Period (2004-2022)

Abstract

The research examined the impact of fiscal policy tools, specifically public spending and tax policies, on foreign direct investment in Iraq during the period from 2004 to 2022. The research relied on a quantitative methodology, where data extracted from reports of the Central Bank of Iraq and the World Bank were analyzed, using econometric models to examine the relationship between these tools and foreign direct investment flows.The results showed that there is a strong positive relationship between public spending and net foreign direct investment income, as it was shown through regression analysis that increasing public spending effectively contributes to enhancing foreign investment flows. In contrast, the research did not show any statistically significant relationship between tax revenues and net FDI income, , which indicates that the impact  of the direct tax system was limited during the study period. Tax policies are likely to influence indirectly through incentives offered to investors and the efficiency of tax administration, in addition to stable political and legislative factors.In light of these results, the research recommended the need to increase public spending in strategic sectors such as infrastructure, education, energy, and health, to create an attractive environment for foreign investment. The research also suggested the need to review and modernize tax policies, and make them more flexible and attractive by adopting appropriate tax incentives and simplifying procedures, while enhancing legislative stability.