Foreign direct investment inflows, trade openness and economic growth in Algeria : an ARDL bounds testing approach 1980-2020

Abstract EN

This study examined the relationship between foreign direct investment inflows (FDI% of GDP), trade openness (TO% of GDP), and economic growth (GDP growth rate%) in Algeria using time series data from 1980 to 2020.

data was taken from the world bank.

the study applied ARDL co-integration analysis together with the error correction model (ECM) technique to examine the long-run as well as the short-run relationships between the variables under study.

the empirical results revealed a positive and significant relationship between trade openness and economic growth both in the long run and short run in Algeria.

the results also showed that FDI inflows had a negative and statistically insignificant long run and short-run relationships with GDP in Algeria during the period.

in line with the results, the study recommended that the government should put in place the required policy that would promote technology-based, export-promoting foreign direct investment.

government should also implement economic reforms to attract more investments.