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Foreign Direct Investment and Economic Growth: Evidence from Iran and GCC

Author

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  • Fateh Habibi

    (Department of Economics, University of Kurdistan, Kurdistan, Iran.)

  • Mohammad Sharif Karimi

    (Department of Economics, Razi University, Kermanshah, Iran.)

Abstract

FDI can create employment and reduce poverty, increase the host country’s export capacity causing the developing country to increase its foreign exchange earnings. The aim of this study is to investigate whether FDI affect economic growth in GCC countries over the period 1980-2014 using ARDL approaches. The empirical results show that the FDI is one of the major drivers of economic growth in Iran and GCC countries. The result of bound test indicates that there is a long-run steady-state relationship between FDI and GDP in Iran and for individual country of GCC. Also results of Granger-causality test imply that a bidirectional causalities from FDI to real GDP growth in Qatar, Saudi Arabia and UAE; unidirectional causalities from FDI to real GDP growth rate in Iran and Bahrain and no causality between FDI and real GDP growth rate in Kuwait and Oman.

Suggested Citation

  • Fateh Habibi & Mohammad Sharif Karimi, 2017. "Foreign Direct Investment and Economic Growth: Evidence from Iran and GCC," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(3), pages 601-620, Summer.
    • Handle: RePEc:eut:journl:v:21:y:2017:i:3:p:601
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    2. Mawih Kareem AL Ani & Kavita Chavali, 2023. "The relationship between investment intensity and profitability measures from the perspective of foreign investors," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
    3. Mowlaei , Mohammad, 2017. "Foreign Capital Inflows and Economic Growth of Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(1), pages 37-54, January.
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    6. Mihaela Sterpu & Carmen Rocșoreanu & Georgeta Soava & Anca Mehedintu, 2023. "A Generalization of the Grey Lotka–Volterra Model and Application to GDP, Export, Import and Investment for the European Union," Mathematics, MDPI, vol. 11(15), pages 1-23, July.

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    Keywords

    FDI; Economic Growth; ARDL; Iran; GCC.;
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