Another Look at the Determinants of Foreign Direct Investment in Mena Countries: An Empirical Investigation

Mohamed, Sufian Eltayeb; Sidiropoulos, Moïse

doi:10.35866/caujed.2010.35.2.005

Cited by 142 publications

(25 citation statements)

References 12 publications

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“…They used the ARDL (Auto Regressive Distributed Lag) model, and they found that GDP per capita had a positive and statistically significant impact on FDI inflows, while inflation rate did not have the expected sign and it was not statistically significant both in long-run and short-run. They suggested that more variables in future researches-such as infrastructure, political stability, country risk, and country openness-will provide a better model to examine the impact of inflation rate and GDP per capita on FDI inflows (Mohamed and Sidiropoulos 2010). Ho et al (2013) have examined the relationship between trade openness, market size, and other fundamentals on FDI in fast emerging six countries including Brazil, China, India, Russia, South Africa, and Malaysia from 1977 to 2010.…”

Section: Literature Reviewmentioning

confidence: 99%

Causal Links between Trade Openness and Foreign Direct Investment in Romania

Mudiyanselage¹,

Epuran²,

Tescașiu³

2021

JRFM

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In this increasingly globalized era, foreign direct investments are considered to be one of the most important sources of external financing for all countries. This paper investigates the causal relationship between trade openness and foreign direct investment (FDI) inflows in Romania during the period 1997–2019. Throughout this study, Trade Openness is the main independent variable, and Gross Domestic Product (GDP), Real Effective Exchange Rate (EXR), Inflation (INF), and Education (EDU) act as control variables for investigating the relationships between trade openness (TOP) and FDI inflow in Romania. The Auto Regressive Distributed Lag (ARDL) Bounds test procedure was adopted to achieve the above-mentioned objective. Trade openness has negative and statistically significant long-run and short-run relationships with FDI inflows in Romania throughout the period. Trade openness negatively affects the FDI inflow, which suggest that the higher the level of openness is, the less likely it is that FDI will be attracted in the long run. The result of the Granger causality test indicated that Romania has a unidirectional relationship between trade openness and FDI. It also showed that the direction of causality ran from FDI to trade openness.

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Section: Literature Reviewmentioning

confidence: 99%

Causal Links between Trade Openness and Foreign Direct Investment in Romania

Mudiyanselage¹,

Epuran²,

Tescașiu³

2021

JRFM

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“…Although FDI has a significant positive relationship with economic development in the host country, researchers have not yet reached a consensus on what determines FDI inflows. Several studies, such as Adamu & Rasiah (2017); Apaydin (2009); Asiedu (2006); Borensztein, De Gregorio, & Lee (1998); Mohamed & Sidiropoulos (2010); Rodríguez & Pallas (2008); Rogmans & Ebbers (2013) and Roy & Mandal (2012), tried to assess what determines FDI flows to a wide spectrum of economies based on the levels of development, i.e., developed and developing countries using panel, cross-sectional, and time series operations. What emerged as a key factor was economic growth, which represents market size, and according to Schneider & Frey (1985) market size represents efficient utilization of resources and economies of scale.…”

Section: Literature Reviewmentioning

confidence: 99%

“…What emerged as a key factor was economic growth, which represents market size, and according to Schneider & Frey (1985) market size represents efficient utilization of resources and economies of scale. Several studies, such as those by Ang (2008), Bevan & Estrin (2004), Mohamed & Sidiropoulos (2010) and Rogmans & Ebbers (2013), suggest economic growth as a significant driver of FDI. Several other studies highlighted other key factors such as labor force and human capital (Steven Globerman & Shapiro, 2003;Rodríguez & Pallas, 2008), and exchange rate (Bevan & Estrin, 2004;Nier et al, 2014).…”

Section: Literature Reviewmentioning

confidence: 99%

Do Good Institutions and Economic Uncertainty Matter to Foreign Direct Investment?

Bommadevara

Sakharkar

2021

Asian Economic and Financial Review

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This study investigates the effects of institutional quality, economic policy uncertainty and other key fundamental factors on foreign direct investment (FDI) inflows for a sample of 22 economies from 2000 to 2019. First, the quality of institutional infrastructure in the host country matter greatly to FDI inflows. Second, a subservient increase in the Economic Policy Uncertainty (EPU) growth rates adversely affects FDI inflows. Additionally, we found that macroeconomic fundamentals pertaining to the level of financial openness, exchange rate stability and financial development in the host country are of great importance to FDI inflows. In essence, the findings from our study suggest that the improvement of macroeconomic fundamentals in conjunction with robust and strong institutional infrastructure can contribute to the moderation of economic policy uncertainty, which deters FDI inflows.Contribution/Originality: This study contributes significantly to the growing literature on determinants of FDI inflows by examining the critical roles of institutions, economic policy uncertainty and other key decisive factors in FDI decisions by applying the dynamic panel data estimations proposed by Kripfganz (2017) as a distinct methodology alongside the two-step GMM system proposed by Blundell & Bond (1998) on a wider selection of countries.

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“…The first school believes that natural resource is a key factor for attracting FDI inflows. Some studies such as Asiedu (2002Asiedu ( , 2006, Bokpin et al (2015), Mohamed and Sidiropoulos (2010) found that natural resources boost the outward FDI to host countries. These studies claim that investments in such extractive industries create very high profits, especially in resource-rich developing economies with low-quality institutions and low environmental regulations.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In the case of the Middle East and North African (MENA) countries, Mohamed and Sidiropoulos (2010) found that natural resources are the key elements for investing MNCs.…”

Section: Literature Reviewmentioning

confidence: 99%

Foreign Direct Investment (FDI) and Natural Resources: Blessing or Curse? Empirical Evidence from the Gulf Cooperation Council (GCC)

Elheddad¹,

Parajuli²,

Alharthi³

2020

J. Rev. Global Econ.

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This paper investigates why foreign direct investment (FDI) inflows are disproportionate among resource and non-resource sectors in oil-rich countries over the period 1980-2017. We constructed a balanced panel of data for Gulf Cooperation Council (GCC) countries from the database of the United Nations Conference on Trade and Development (UNCTAD) and disaggregate data from The Financial Times. We regress total and sectoral FDI inflows on oil rents to a GDP ratio, controlling other socio-economic variables. Our results first consider oil rents. This proxy for natural resources is negatively associated with total FDI inflows. The oil rents/GDP share and resource-based FDI have a significantly positive correlation. However, the adverse effect of oil rents remains true in the case of the non-resource sector foreign investment. Second, oil price fluctuations lead to a rise in the non-resource FDI but discourage resource-related FDI inflows. These empirical results confirm that FDI-Natural resources curse through the crowd-out effect of natural resources in the Gulf Cooperation Council (GCC) countries. Our results are robust to different panel data estimators.

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Another Look at the Determinants of Foreign Direct Investment in Mena Countries: An Empirical Investigation

Cited by 142 publications

References 12 publications

Causal Links between Trade Openness and Foreign Direct Investment in Romania

Causal Links between Trade Openness and Foreign Direct Investment in Romania

Do Good Institutions and Economic Uncertainty Matter to Foreign Direct Investment?

Foreign Direct Investment (FDI) and Natural Resources: Blessing or Curse? Empirical Evidence from the Gulf Cooperation Council (GCC)

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