Labor Market Flexibility and FDI Flows: Evidence from Oil-Rich GCC and Middle Income Countries

Wasseem Mina () and Louis Jaeck

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we empirically examine the impact of labor market flexibility on FDI flows to oil-rich GCC and compare it to middle income countries in 2006-2011. We account for potential endogeneity and nonstationarity and adopt system GMM and IV estimation methodologies. Our findings show that in middle income countries overall flexibility increases FDI flows under both system GMM and IV methodologies. In GCC countries overall LMF decreases FDI flows under system GMM methodology. Results also show a positive “GCC region” influence outweighing the negative flexibility influence. Growth potential and infrastructure development matter for both GCC and middle income countries.

Keywords: Labor markets; FDI; GCC; Middle income countries; UAE (search for similar items in EconPapers)
JEL-codes: F2 F21 J3 J32 J38 J5 J53 J58 J6 J65 J68 (search for similar items in EconPapers)
Date: 2015-03-04
New Economics Papers: this item is included in nep-ara, nep-ene, nep-int, nep-lab and nep-lma
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Related works:
Working Paper: Labor Market Flexibility and FDI Flows: Evidence from Oil-Rich GCC and Middle Income Countries (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:62652

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