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The law of growth and attraction: an endogenous model of absorptive capacities, FDI and income for MENA countries

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  • Alaya MAROUANE (Université of Tunis)
  • Dalila NICET-CHENAF (GREThA UMR CNRS 5113)
  • Eric ROUGIER (GREThA UMR CNRS 5113)

Abstract

In this paper, we build a structural model of growth and we estimate it on panel data. We go further than the previous studies of Bende et al. (2000, 2003) or Li & Liu (2005), because we not only control for the endogenity of FDI towards growth, but we also control for the endogenity of FDI towards the other variables (trade openness, domestic investment, human development) that are likely to increase the effects of foreign investments on growth through the absorption capacities building. We show that this model brings in new and interesting results about the interactions between attraction, FDI and growth in MENA countries (Middle East and North Africa countries).

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Paper provided by Groupe de Recherche en Economie Théorique et Appliquée in its series Cahiers du GREThA with number 2008-27.

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Date of creation: 2008
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Handle: RePEc:grt:wpegrt:2008-27

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Keywords: FDI; Human capital; Growth; simultaneous equations; MENA;

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