Foreign direct investment in Lebanon

Abstract

Lebanon has a free-market economy and a strong laissez-faire commercial tradition, and its foreign investment is not bound. However, the investment climate suffers from corruption, bribery, fraud, arbitrary licensing decisions, complex civilization measures, outdated legislation, and weak intellectual property rights. The Lebanese economy is service-oriented with main growth sectors in banking and tourism. The 1975-90 war in Lebanon seriously injured Lebanon's economic infrastructure, cut national output by half, and derailed Lebanon's position as a Middle Eastern cache and banking center. In order to fix this economic situation, the key solution revolves around foreign direct investment. FDI is an investment made to obtain long-term interest in enterprises operating outside of the economy of the investor. The investment is direct because the investor supervises, or has a significant power over the foreign enterprise. Exports and FDI have been key in China's quick economic growth. According to the World Bank, FDI- an outer finance- is vital in developing the private sector in lower-income economies and in reducing poverty. FDI, important for developing countries, is different from other main types of external private capital flows in that it is motivated mainly by the investors' long-term prediction for making earnings in productions they directly run. FDI allows the ingress of technology, develops human capital, and encourages rivalry in the domestic market. Profits generated by FDI add to corporate tax revenues in the host country. The aim of the paper is to show the great benefits that FDI will have on the Lebanese financial-economic growth.