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Does Economic Freedom Enhance the Impact of Foreign Direct Investment on Economic Growth in North African Countries? A Panel Data Analysis

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  • Nahed Zghidi
  • Imen Mohamed Sghaier
  • Zouheir Abida

Abstract

type="main" xml:lang="en"> This article investigates the causal interactions between foreign direct investment (FDI), economic freedom and economic growth on a panel of four North African countries (Tunisia, Morocco, Algeria and Egypt), over a 5-year period from 1980 to 2013. Using the System Generalized Method of Moments (GMM) in a panel data analysis, we found strong evidence of a positive link between FDI and economic growth. We also found that economic freedom appears to be working as a complement to FDI and that the effect of FDI is more pronounced in the presence of the economic freedom variable. This means that the countries which promote greater freedom of economic activities benefit more from the presence of multinational corporations (MNCs).

Suggested Citation

  • Nahed Zghidi & Imen Mohamed Sghaier & Zouheir Abida, 2016. "Does Economic Freedom Enhance the Impact of Foreign Direct Investment on Economic Growth in North African Countries? A Panel Data Analysis," African Development Review, African Development Bank, vol. 28(1), pages 64-74, March.
    • Handle: RePEc:bla:afrdev:v:28:y:2016:i:1:p:64-74
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    1. repec:bla:afrdev:v:31:y:2019:i:2:p:216-229 is not listed on IDEAS
    2. J. Paul Dunne & Nicholas Masiyandima, 2017. "Bilateral FDI from South Africa and Income Convergence in SADC," African Development Review, African Development Bank, vol. 29(3), pages 403-415, September.
    3. Njangang Henri & Nembot Ndeffo Luc & Nawo Larissa, 2019. "The Long‐run and Short‐run Effects of Foreign Direct Investment on Financial Development in African Countries," African Development Review, African Development Bank, vol. 31(2), pages 216-229, June.
    4. repec:bla:afrdev:v:29:y:2017:i:1:p:92-102 is not listed on IDEAS
    5. repec:bla:afrdev:v:30:y:2018:i:1:p:86-99 is not listed on IDEAS
    6. Philip Ifeakachukwu Nwosa & Temidayo Oladiran Akinbobola, 2016. "Capital Inflows and Economic Growth in Nigeria: The Role of Macroeconomic Policies," African Development Review, African Development Bank, vol. 28(3), pages 277-290, September.
    7. repec:bla:afrdev:v:29:y:2017:i:2:p:211-222 is not listed on IDEAS
    8. repec:bla:afrdev:v:30:y:2018:i:1:p:112-130 is not listed on IDEAS
    9. repec:gam:jeners:v:10:y:2017:i:10:p:1578-:d:114746 is not listed on IDEAS

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