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Issues in International Oil Trade & Qatar

Introduction

Throughout the history, the counties have derived policies to attract foreign direct investment so that the employment and productivity can increase. Due to the inflow of foreign investment, the manufacturing sector of the country witnesses a boom because of the incoming capital. It has been noted that the FDI brings along with it all the opportunities for the labor market of the country. The services sector also witnesses a boom because of this incoming capital. If the country is enriched with oil resources then the inflow of FDI serves to be a golden opportunity as fit helps in establishing oil refineries and other facilities like oil rigs that can help in the extraction process. The paper will discuss the FDI in Qatar and the oil production capacity of the country. The paper will also discuss the extent to which the oil supply has become problematic and the role of costs, exceeding demand and changing routes in shaping up the situation.

Discussion

Qatar's FDI and Energy production

The inflow of FDI has always helped the countries in their economic growth. With FDI, the transfer of technology takes place from one country to another. In case of an underdeveloped country, the developed country transfers its technology so that the economic activity in the underdeveloped could be generated. The best companies from the developed countries establish their plants in the underdeveloped countries in order to utilize the cheap labor or they start joint ventures with the firms in the underdeveloped region in order to enhance the cooperation between the two countries (Moosa, p. 15). In the regions, enriched by oil resources, the developed countries show their interest to install their modern equipment to extract oil so that the profits could be maximized by minimizing the costs. The installation of modern equipment not only helps in enhancing the production but it also may help in increasing the exports of the country because of the production that is more than the local consumption.

The data about Qatar seems to be impressive because it is one of the regions that are enriched by oil resources. It was a boom in energy prices that helped the region's economy in growing. Since 2000, the government has brought changes into the legislation and the regulatory framework in order to attract the foreign investors to the country. The changes were done to attract the capital so that the economy could be diversified. The economy has gone through a liberalization phase and Qatar has been seen as the only Gulf country to have such a liberal policy. The legislations that were passed in 2000 were astonishing because the government had given an opportunity to the foreign investors to have as much as 100% ownership of the companies that they invest in.

The sectors that were to see the investment inflow included the energy sector along with agriculture, health, tourism, education and service industry. Before the legislation in 2000, the foreign investors were allowed to have not ...