The impact of foreign direct tourism investment on the national economy

Ahmed Majed Badawi Hamza
Supervisor: Prof. Dr. Abd Ali Kazim Al-Fatlawi

The impact of foreign direct tourism investment on the economy depends on the scope of direct tourism investment relative to the rest of the economy and on the degree of influence of tourism projects that include foreign direct investment from competitors, suppliers, local distributors, or local infrastructure related to investments. The relative scope of direct tourism investment in Arab countries has increased recently. On this basis, it significantly impacts tourism development in any country in the Arab world. Foreign direct tourism investment made by foreign companies in these countries should be considered one of the most significant financial resources available for developing countries.

The effectiveness of foreign direct tourism investment as a force for tourism development in Arab countries depends on two factors, which are:
1- The impact of direct tourism investment versus tourism development depends on the internal tourism resources of Arab countries.
2- The political and commercial feasibility of integrating sustainability criteria into the decision-making process related to foreign direct tourism investments. (Bzazo, 2022: 396)
Al-Nouri (2006) believes that the free movement of capital around the world only benefits global capitalism, the national capitalism associated with it, and some professions without other categories and that the rush to attract foreign tourism investment between countries is a kind of (race to the bottom), while the proponents of the (race to the top) theory believe that competition for foreign tourism investment leads in the countries of the North and the South alike to raising the level of the tourism sector, which ultimately increases the standard of living in all countries. A third group believes that foreign direct tourism investment develops and upgrades certain tourist areas at other regions’ expense. The most common view is that the role of multinational corporations and foreign investment in influencing living standards is limited. The proponents of this view argue that foreign investment still represents a small percentage of national income, that it usually moves between rich countries, and that the number of developing countries that received 80% of foreign investment during the 1980s and 1990s is small (Bazazo, 2022: 397).