Determinants of FDI inflows in the MENA countries

Abstract EN

Foreign Direct Investment (FDI) might bring positive effects such as market access, technology, capital and skills to the developing countries.

Therefore, the developing countries’ governments are progressively searching for best-practice policies to attract more FDI inflows.

In this context, this research aims to investigate the relationship between FDI inflows and their determinants in MENA (region of the Middle East and the North Africa( during the period 1985- 2010.

The study employs dynamic panel data.

In the used model, the dependent variable is FDI and the independent variables are FDI in the previous year, GDP growth rate, inflation, Trade openness, External debt, Oil rent, Total population, Government capital expenditure and Exports of goods and services.

According to the econometric results, FDI in the previous year and GDP growth rate are the potential determinants of FDI inflows of MENA region.

The exchange rate, inflation, trade openness, external debt, oil rent, exports of goods and services, Government capital expenditure and Total population seem to be insignificant determinants of FDI inflows in the MENA countries