FDI in the European Union and Mena Countries: Institutional and Economic Determinants

José Manuel Martins Caetano () and Aurora Galego ()

CEFAGE-UE Working Papers from University of Evora, CEFAGE-UE (Portugal)

Abstract: FDI flows to the Middle East and North Africa countries (MENA) have been relatively low when compared to the neighbouring European Union (EU) and to other developing and emerging countries. Furthermore, empirical research on FDI in these countries is relatively scarce. In this paper we use panel data regressions and consider a period of 9 years (since mid nineties) to investigate possible differences in the determinants of FDI performance in these regions. In particular, we use a panel of 42 countries which include 17 MENA countries and 25 European countries. Unlike previous studies, we consider the inward FDI performance index, as provided by UNCTAD, as dependent variable and include both institutional and macroeconomic variables as possible determinants of FDI. The aim is to investigate whether there are region-specific factors that are significant for FDI performance. We conclude that there are some significant differences on the institutional determinants of FDI performance, namely in what concerns Investment Freedom, Government Size and Trade Freedom.

Keywords: Foreign Direct Investment; Determinants; Institutions; Middle East North Africa countries (MENA); European Union (EU); Panel Data. (search for similar items in EconPapers)
JEL-codes: F21 E02 C23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara and nep-eec
Date: 2009
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Persistent link: http://EconPapers.repec.org/RePEc:cfe:wpcefa:2009_09

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