IDEAS home Printed from https://ideas.repec.org/a/asi/aeafrj/v15y2025i8p1290-1305id5552.html
   My bibliography  Save this article

FDI inflows and economic growth in north African countries: Do institutional quality and financial development matter?

Author

Listed:
  • Abdelkarim Yahyaoui

Abstract

Our study enhances the existing literature regarding the relationship between foreign direct investment (FDI) and economic growth. Our objective is to identify the main transmission mechanisms through which FDI flows can stimulate economic growth in North African countries. An analysis of four North African countries (Tunisia, Algeria, Morocco, and Egypt) from 2000 to 2022 clearly shows that FDI flows are positively related to economic growth, and this relationship improves when these countries have strong institutions and a better financial system. We obtained the results using the Generalized Method of Moments Estimation (System GMM). Our main findings indicate that the quality of institutions and a well-developed financial system are key factors in attracting foreign direct investment (FDI). Therefore, the successful implementation of the rule of law attracts foreign investment, promoting economic growth. Elevated levels of corruption diminish the beneficial impact of FDI on economic growth in these nations. To attract foreign investment, these countries need a robust system with low corruption, a functioning legal system, and fewer bureaucratic obstacles. The results of this study have significant implications for policymakers. Our study provides recommendations for policymakers in North African nations based on the obtained results.

Suggested Citation

  • Abdelkarim Yahyaoui, 2025. "FDI inflows and economic growth in north African countries: Do institutional quality and financial development matter?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 15(8), pages 1290-1305.
    • Handle: RePEc:asi:aeafrj:v:15:y:2025:i:8:p:1290-1305:id:5552
    as

    Download full text from publisher

    File URL: https://archive.aessweb.com/index.php/5002/article/view/5552/8398
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:asi:aeafrj:v:15:y:2025:i:8:p:1290-1305:id:5552. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Robert Allen (email available below). General contact details of provider: https://archive.aessweb.com/index.php/5002/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.