Classification of OIC Countries Based on Factors Influencing Foreign Direct Investment

There are several indices based on which the member states of the Organization of the Islamic Countries (OIC) can be classified in attracting foreign direct investments. Some of the more important ones are gross domestic product (per capita or its growth rate), inflation rate, trade openness index, wage rate index or unit labor cost (ULC), the ratio of savings to gross domestic product, the ratio of foreign debt to gross domestic product, average tariff rate, the ratio of government expenditure to gross domestic product, the Gini Coefficient (an income distribution indicator), the ratio of domestic investment to gross domestic product, time laps in foreign investments, exchange rate variability, political stability index, foreign investment risk index, economic freedom index, globalization index, regionalism index and other factors impacting foreign investment attraction. In this article an attempt is made to classify the member states of the Organization of the Islamic Countries, OIC, based on their ability to attract foreign direct investments, FDI. In so doing, economic, social and political indices affecting FDI were introduced and then by using the Numerical Taxonomy technique this classification was done. The results indicate that Iran is in the thirty fifth places among forty three countries.