According to the report's Inward FDI Potential Index, which is based on 2003 figures, Qatar was ranked 7th in the world, the UAE was ranked 22nd, Bahrain 29th, and Kuwait was placed 41st.

As for actual FDI performance for 2004, last year saw an upturn in global FDI and the countries of West Asia were major beneficiaries. FDI inflows to West Asia rose from $6.5 billion to $9.8 billion, of which more than half was concentrated on Saudi Arabia, The Syrian Arab Republic and Turkey. China continues to be the largest developing-country recipient with $61 billion of FDI inflows.

The report also showed that Bahrain outperformed other Arab countries for actual FDI performance, achieving 27th place in terms of world ranking. This was ahead of Qatar (63rd), Saudi Arabia (121st) and Kuwait (138th). The top ranking countries were Azerbaijan at number one and Belgium and Luxembourg at number two. The US was ranked 114th. In terms of FDI outflows Bahrain also recorded the highest figure for the region, coming 6th in terms of world ranking, compared to the UAE in 63rd place and Saudi Arabia in 85th place.

The main purpose of the World Investment Report 2005 was to determine which countries stood to benefit the most from the internationalisation of research and development (R&D) by transnational companies (TNC) - such as financial institutions, auto manufacturing and electronics companies.  

By measuring the difference between actual FDI performance and potential FDI performance it is possible to capture some idea of how TNCs perceive different countries as location for their future R&D. Capturing this market is important if countries want to benefit from the changing structure of the world economy as it shifts from a manufacturing to a knowledge-based one. The ability to offer high-end R&D capabilities is, in essence, the proposition being put forth by Dubai's Outsource Zone.

The relative high ranking of several of the Gulf States suggests that they are increasingly perceived as attractive locations for highly complex R&D. As the report states, [this] "indicates that it is possible for countries to develop the capabilities that are needed to connect with the global R&D systems of TNCs."   And because R&D internationalisation facilitates the transfer of technology, this "may enable some host countries to strengthen their technological and innovation capabilities," says the report. But it may also widen the gap with those that fail to connect with the global innovation network."

Even though, however, several of the Gulf States are perceived by TNCs as relatively good places in which to invest, to ensure this momentum is not lost countries must continually innovate if they are to maximise the benefits from the R&D internationalisation process. UNCTAD has introduced a new measure of national innovation capabilities — the Innovation Capability Index — and, according to this, differences are growing over time. Most Gulf States fall into the medium capability group — which comprises economies in transition, most of the resource-rich and newly industrialising economies — while some West Asian countries fall in the low capability group.

If countries are to realize the opportunities that the World Investment Report shows are there they must interact with TNCs and have a clear vision of how they can work together. Perhaps, most importantly, according to the report, they should remember that: "Sustainable economic development requires more than simply 'opening up' and waiting for new technologies to flow in. It demands technological effort by domestic enterprises, along with supportive government policies."