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The Impact of Foreign Direct Investment on the Economic Growth of Egypt (1980-2018)

Author

Listed:
  • Safwat Alaa

    (Department of Finance, College of Management and Technology, Arab Academy for Science and Technology, Giza, Egypt.)

  • Salah Ashraf

    (Department of Finance, College of Management and Technology, Arab Academy for Science and Technology, Giza, Egypt.)

  • Elsherif Marwa

    (Department of Finance, College of Management and Technology, Arab Academy for Science and Technology, Giza, Egypt.)

Abstract

Many developments had occurred in the global economy. Among these developments is the increase of capital flows across countries. Foreign direct investment (FDI) is considered to be one of the cross border capital flows that countries use in order to enhance their economic growth. This study focuses on how FDI impacts the economic growth of Egypt for a period from 1980 to 2018. The study applies Johansen co-integration, Vector Error Correction Model (VECM) and Ganger causality in the methodology. Johansen co-integration results show that a long run relationship exists among the variables. In addition, VECM shows that FDI exerts a positive significant impact on the economic growth of Egypt. Finally, a bidirectional causality between FDI and the economic growth of Egypt is shown by Granger causality.

Suggested Citation

  • Safwat Alaa & Salah Ashraf & Elsherif Marwa, 2021. "The Impact of Foreign Direct Investment on the Economic Growth of Egypt (1980-2018)," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 74-85.
    • Handle: RePEc:eco:journ1:2021-05-9
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    More about this item

    Keywords

    Foreign Direct Investment; Economic Growth; Johansen Co-integration; Vector Error Correction Model; Granger Causality Test;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F6 - International Economics - - Economic Impacts of Globalization
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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