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Trade and foreign exchange liberalization, investment climate and FDI in the MENA countries

Khalid Sekkat and Marie-Ange Véganzonès

No 04-023.RS, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: The paper assess the relative importance of trade and foreign exchange liberalization, infrastructure availability and economic and political stability in increasing Middle East and North African (MENA) countries attractiveness with respect to FDI. The analysis is conducted for total FDI and for FDI in manufacturing. The results show that trade and foreign exchange liberalization, infrastructure availability and sound economic and political conditions increase FDI inflows. Their effects are much higher for FDI in the manufacturing sector than for total FDI. This result is robust to alternative indicators of trade and foreign exchange liberalization, and to change in the specification. The message to MENA’s policy makers is twofold. First, efforts toward trade and foreign exchange liberalization should be initiated or further increased in order to make the region attractive to foreign investors. Second improvements in other aspects of the investment climate are important complements to liberalization and result in additional and sensitive increase of FDI inflows.

Keywords: Reforms; MENA; FDI. (search for similar items in EconPapers)
JEL-codes: F21 F15 K42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk, nep-ifn, nep-int and nep-law
Date: 2004-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Published by: Centre Emile Bernheim, Bruxelles

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Working Paper: Trade and Foreign Exchange Liberalization,Investment Climate, and FDI in the MENA Countries (2004) Downloads
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