Trade and foreign exchange liberalization, investment climate and FDI in the MENA
AbstractThe paper assesses the relative importance of trade and foreign exchange liberalization, infrastructure availability and economic and political stability in increasing Middle East and North African (MENA) countries attractiveness with respect to FDI. The analysis is conducted for total FDI and for FDI in manufacturing. The results show that trade and foreign exchange liberalization, infrastructure availability and sound economic and political conditions increase FDI inflows. Their effects are much higher for FDI in the manufacturing sector than for total FDI. This result is robust to alternative indicators of trade and foreign exchange liberalization, and to change in the specification. The message to MENA’s policy makers is twofold. First, efforts toward trade and foreign exchange liberalization should be initiated or further increased in order to make the region attractive to foreign investors. Second improvements in other aspects of the investment climate are important complements to liberalization and result in additional and sensitive increase of FDI inflows.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series DULBEA Working Papers with number 05-06.RS.
Length: 23 p.
Date of creation: Feb 2005
Date of revision:
Publication status: Published by: DULBEA - Université libre de Bruxelles, Bruxelles
Reforms; MENA; FDI.;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F15 - International Economics - - Trade - - - Economic Integration
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-14 (All new papers)
- NEP-FMK-2005-08-17 (Financial Markets)
- NEP-INT-2005-09-19 (International Trade)
- NEP-LAW-2005-08-16 (Law & Economics)
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