Foreign Direct Investment, Macroeconomic Instability And Economic Growth in MENA Countries

Mustapha Sadni Jallab (), Monnet Benoît Patrick Gbakou and René Sandretto ()
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Monnet Benoît Patrick Gbakou: GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France
René Sandretto: GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France

No 817, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: This paper aims at analyzing the possible influence of foreign direct investment (FDI) on economic growth in the particular case of Middle East and North African countries (MENA). During the last years, the relation between FDI and growth in LDCs has been discussed extensively in the economic literature. However, the view that FDI stimulates economic growth does not receive an unanimous support. In order to access empirically this relation in MENA countries, we use a dynamic panel procedure with observations per country over the period 1970-2005. To improve efficiency, we use the standard “difference” and “system” GMM and 2SLS estimators. Our findings show that there is no independent impact of FDI on economic growth. The growth-effect of FDI does not also depend on degree of openness to trade and income per capita. But, the positive impact of FDI on economic growth depends on macroeconomic stability: there is a threshold effect of annual percentage change of consumer prices.

Keywords: Foreign Direct Investment; Macroeconomic stability; Economic Growth; Middle East and North Africa; Two-stage Least Squares; Generalized Moments Methods (search for similar items in EconPapers)
JEL-codes: C32 C33 F21 F23 F43 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2008
New Economics Papers: this item is included in nep-afr, nep-fdg and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Foreign Direct Investment, Macroeconomic Instability And Economic Growth in MENA Countries (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:0817

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