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Trade and Foreign Exchange Liberalization, Investment Climate and FDI in the MENA Countries

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Author Info
Khalid Sekkat () (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels)
Marie-Ange Veganzones-Varoudakis () (CERDI, Centre National de la Recherche Scientifique, Clermont Ferrand)

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Abstract

The paper assess 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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File URL: http://www.solvay.edu/EN/Research/Bernheim/documents/wp04023.pdf
File Format: application/pdf
File Function: First version, 2004-05
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Publisher Info
Paper provided by Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) in its series Working Papers CEB with number 04-023.RS.

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Length: 22 pages
Date of creation: May 2004
Date of revision:
Handle: RePEc:sol:wpaper:04-023

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Related research
Keywords: Reforms; MENA; FDI.;

Other versions of this item:

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

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  17. Henisz, Witold J, 2000. "The Institutional Environment for Multinational Investment," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 334-64, October.
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    Other versions:
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    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hisarciklilar, Mehtap & Kayam, Saime Suna & Kayalica, Ozgur, 2006. "Locational Drivers of FDI in MENA Countries: A Spatial Attempt," MPRA Paper 2085, University Library of Munich, Germany. [Downloadable!]
  2. Heather D. Gibson & Nicholas T. Tsaveas & Thomas Vlassopoulos, 2006. "Capital Flows, Capital Account Liberalisation and the Mediterranean Countries," Working Papers 33, Bank of Greece. [Downloadable!]
  3. Daniele, Vittorio & Marani, Ugo, 2006. "Do institutions matter for FDI? A comparative analysis for the MENA countries," MPRA Paper 2426, University Library of Munich, Germany. [Downloadable!]
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