The determinants of foreign direct investment in MENA countries: an extreme bounds analysis

The determinants of foreign direct investment inflows are examined by applying extreme bounds analysis to a cross-sectional sample encompassing data on 18 Middle Eastern and North African countries. With the gross domestic product growth rate serving as the free variable, eight potential explanatory variables are tried as the variables of interest in combination with three other variables. The results reveal that only one variable is robust when traditional EBA is used. However, when restricted EBA is used, the results based on the 60% of the regressions with the highest R 2 reveal three more robust variables. Some explanations for the results are put forward.