July 9, 2024

Foreign direct investment and economic growth in Arab countries: do institutions, financial development and human capital matter?

AOAnis OchiUniversity of Jendouba AHAmine HaousUniversité IBN Khaldoun Tiaret ASAnis SaidiUniversity of Jendouba

Key Points

Economic growth increases significantly with foreign direct investment above specific thresholds.
Key thresholds identified are 1.8 for human capital, -0.44 for institutional quality, and 0.29 for financial development.
Dynamic panel threshold model analysis reveals a nonlinear relationship between FDI and growth in this region from 2002-2019 .

Abstract

Abstract This study examines the effect of foreign direct investment (FDI) on economic growth, with emphasis on the role of institutional quality, human capital and financial development for Arab countries over the period 2002-2019. We found that the nexus between FDI and growth is nonlinear. By using a dynamic panel threshold model, the results show that there is a statistically positive relationship between FDI and growth above thresholds of 1.8 for human capital, -0.44 for institutional quality and 0.29 for financial development, above which FDI increases economic growth in Arab countries. Based on the results, this research proposes several policy recommendations. JEL Classification numbers : F21, F43, G34, J24, C24

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Cite This Study

Ochi et al. (Tue,) studied this question.

synapsesocial.com/papers/68e60f5cb6db6435875a2063 https://doi.org/https://doi.org/10.21203/rs.3.rs-4697114/v1

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