The Effectiveness of international investment instruments on the amount of foreign investment (a case study of Iran)

This is an analytical study which aims to gauge the extent to which international treaties have been effective in directing foreign investment to Iran. The two types of treaties studied here include Bilateral Investment Treaties and Double Taxation Agreements. Data as to the amount of investment in Iran as well as some information regarding the domestic investment regulatory framework in Iran is presented. The country has experienced widely different attitudes towards investment in the last 30 years because of its domestic political changes and, of course, in response to international developments. Upon recovering from the initial nationalistic shock of the 1979 revolution, Iran has engaged in many international instruments in the last 15 years and has also made several changes to its domestic fiscal and investment laws to provide foreign investors with a more favourable investment climate. These attempts have partly succeeded in the sense that there has generally been an upward trend in the amount of foreign investment channelled to Iran since 1994. This amount, however, is still much lower than is the norm for a country of the size and natural resources of Iran. Through investigating different impediments to foreign investment in the country, the study finds that overwhelmingly political and non-legal factors such as the relationship between Iran and the West and the attitude of the Iranian administrations to international trade carry much greater weight than merely concluding treaties. Despite this, the number of treaties concluded could be a good indicator of the political climate of the country at any given time and it can be seen that the government’s plans for attraction of foreign investment have always been clearly more successful throughout periods when more treaties were signed.