Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
Iraq has great potential of different resource that may not be obtainable in other countries. Iraq is one of the geographical locations that have diversity in terms of natural resources and investment components; that date back to thousands of years. A continually decreasing trend in investment and the growth of economy are the key problems that adversely affect Iraqi economy. Despite an increase in income promotes high investment, increase in the rate of interest might decrease the level of investment because it turns out to be extra expensive to have a loan of money. The importance of the study comes from estimate how the changes interest rate has impact on the level of investment of Iraq. Investment is the most important element of any economy and it is a key factor for growth in every epoch. Current paper tries to identify and analysis the impacts of interest rate on investment currently and in the future in the case of Iraq. To achieve this objective of fulfilling its full potential, present paper adopts OLS approach, and the secondary data was used for the period of (1980-2010). The results of this study were investigated to be in line with the economic theory and some other studies in the sense that interest rate has a negative impact on investment, where it is found that an increase in the interest rate by 1% decreases the level of investment by -9.98 %. Current study efforts to present a clear picture of the investment and interest rate of Iraq. The study also identifies the problems that facing the Iraqi economy and selects the necessary policy to solve the problem.

Keywords: interest rate, investment, GDP, economic analysis, OLS approach, Iraq

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