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The recent research on foreign direct investment stressed the significance of good governance. A number of multinational reports confirmed that the Arab region has one of the lowest governance indicators in the world. This article assesses the effects of governance on foreign direct investment inflows in Arab countries using panel regression based on an augmented gravity model. The regression results lend a strong support for the significance of good governance to foreign direct investment inflows.
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Bannaga et al. (2013) studied this question.
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