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

Monnet Gbakou (), Mustapha Sadni Jallab () and René Sandretto ()
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Monnet Gbakou: GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique
René Sandretto: GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique

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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)
Date: 2008
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00303694
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Citations: View citations in EconPapers (11)

Published in 2008

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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:hal:journl:halshs-00303694

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