weighted score 3.2 · ten dimensions
Sourcing Attractiveness Index · ten dimensions
Iraq
Labour cost, supply base depth, logistics infrastructure, trade access, and innovation scores for Iraq as a sourcing destination.
Labour cost competitiveness
7
Low wages but offset by security costs, unreliable utilities, and limited skilled labour outside oil sector. Net cost advantage is marginal after accounting for operational risks.
Supply base depth
3
Manufacturing base outside oil refining is minimal. Decades of conflict destroyed industrial infrastructure. Some food processing and construction materials at small scale.
Logistics & infrastructure
3
Umm Qasr port capacity limited. Road infrastructure degraded. Electricity and water shortages chronic. Reconstruction improving some corridors but from very low base.
Workforce skills
3
Brain drain to Gulf states and Europe. University system degraded. Skilled labour scarce outside oil sector. Young population but high youth unemployment.
Scalability
5
Population ~44 million provides theoretical labour pool. Oil revenue could fund diversification. But security conditions, infrastructure deficits, and governance failures constrain practical scalability.
Ease of doing business
2
Among the most difficult business environments globally. Corruption pervasive (TI CPI 28). Militia interference. Complex import licensing. Banking sector underdeveloped.
Trade access & tariffs
3
Not a WTO member (observer). No significant FTAs. EU PCA partially applied. Trade conducted on MFN or bilateral terms. Dollar auction system under US scrutiny.
Sustainability baseline
2
Gas flaring among highest globally. Environmental damage from oil industry extensive. Water crisis worsening. No meaningful ESG reporting infrastructure.
Innovation & IP
2
R&D investment negligible outside oil. IP enforcement non-existent in practice. University system degraded. Brain drain ongoing.
Quality standards
2
Quality management limited to oil and gas. No meaningful quality assurance infrastructure for manufactured goods. International certification rare.
Labour & Cost Competitiveness
Labour & Cost Competitiveness
- Wage levels
- Labour costs are low by global standards. However, the labour market is distorted by security conditions, militia influence, and large informal economy. Skilled labour availability is limited outside oil and gas sectors.
- Total cost of ownership
- Low wages are offset by extremely high security costs, unreliable utilities (electricity, water), poor transport infrastructure, and complex import procedures. Total cost of ownership for manufacturing operations is unfavourable relative to alternatives.
- Labour market dynamics
- Population ~44 million with a young demographic profile. Youth unemployment is high. Brain drain to Gulf states and Europe has depleted skilled workforce. Reconstruction activity absorbs much available construction labour.
- Oil sector dominance
- Oil industry employs a small fraction of the workforce but generates 93% of government revenue. The non-oil private sector is underdeveloped. Economic diversification is a stated policy goal but progress is slow.
Supply Base & Infrastructure
Supply Base & Infrastructure
- Manufacturing base
- Manufacturing capacity outside oil refining is minimal. Decades of conflict and sanctions have destroyed industrial infrastructure. Some food processing, construction materials, and light manufacturing exist but at small scale.
- Port infrastructure
- Umm Qasr is Iraq's main commercial port. Capacity is limited, congestion is common, and equipment is outdated. Port modernisation is planned with Gulf state investment but remains early stage.
- Reconstruction investment
- Gulf states (UAE, Saudi Arabia, Kuwait) and Chinese companies are investing in infrastructure reconstruction. These partnerships are creating some new economic activity but the base remains very low.
- Kurdistan Region
- The Kurdistan Region of Iraq has somewhat better business environment, more stable security, and its own trade relationships. However, federal-KRI political tensions and oil revenue disputes create jurisdictional risk.
Trade Access & Business Environment
Trade Access & Business Environment
- Trade agreements
- Iraq is not a member of the WTO (observer status). No significant FTAs in force. Trade is conducted on MFN or bilateral terms. EU-Iraq Partnership and Cooperation Agreement partially applied.
- Business environment
- World Bank Doing Business indicators (historical) ranked Iraq near the bottom globally. Regulatory complexity, corruption, and security challenges create an extremely difficult operating environment for foreign businesses.
- Banking & finance
- Banking sector is underdeveloped. Dollar auction system managed by the Central Bank of Iraq has been subject to US scrutiny for sanctions evasion. International payment processing is complex.
- IMF engagement
- Iraq maintains IMF engagement and has implemented some fiscal reforms. However, structural dependence on oil revenue and militia influence over economic institutions limit reform credibility.
Innovation, IP & Quality
Innovation, IP & Quality
- Innovation capacity
- R&D investment is negligible outside the oil sector. University system has been degraded by decades of conflict. Brain drain has depleted the scientific and technical workforce.
- IP framework
- IP protection framework exists on paper but enforcement is effectively non-existent. Courts lack capacity to adjudicate IP disputes. Foreign IP holders have minimal recourse.
- Quality standards
- Quality management systems are limited to the oil and gas sector and some reconstruction contractors. No meaningful quality assurance infrastructure exists for manufactured goods.
- Technology adoption
- Mobile phone penetration is relatively high. Internet infrastructure improving but unreliable. Digital economy remains nascent. E-commerce and fintech are emerging in Kurdistan Region.