Good Governance Indicators and Foreign Direct Investment Attraction: Case Study of the Khatami Administration

Document Type : Research Article

Authors

1 Ph.d. Student of Public Policy, Faculty of Law & Political Sciences, University of Tehran, Tehran, Iran

2 Professor of Political Science, Faculty of Law & Political Sciences, University of Tehran, Tehran, Iran

10.22059/jppolicy.2026.107808

Abstract

Attracting foreign direct investment (FDI) as a key driver of economic growth and development depends significantly on the quality of governance. This study aims to examine the role of the six indicators of good governance in attracting foreign investment during the presidency of Seyyed Mohammad Khatami (1997–2005). The research method is documentary and library-based, relying on secondary data from international reports and domestic sources. The findings indicate that during this period, efforts were made to improve transparency, the rule of law, and civic participation, which coincided with an increase in foreign investment inflows in 2002–2003. However, political crises and institutional constraints hindered the full realization of the potential impact of these indicators. Political stability and a foreign policy of de-escalation were identified as supportive factors, while weak law enforcement and insufficient control of corruption were identified as major obstacles. The results suggest that enhancing governance indicators can significantly improve a country’s attractiveness to foreign investors. Accordingly, institutional reforms, strengthening transparency, and reducing corruption are recommended as essential strategies for establishing a stable environment conducive to foreign investment.

Keywords

References

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Iranian Journal of Public Policy
Volume 12, Issue 2
June 2026
Pages 136-151

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