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Institutional and Economic Determinants of FDI: A Comparison between the European Union and the MENA Region

Author

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  • Galego Aurora

    (Universidade de Évora and CEFAGE-UE)

  • Caetano José Manuel

    (University of Évora and CEFAGE-UE)

Abstract

FDI flows to the MENA region have been relatively low when compared to neighboring countries. This paper aims at investigating whether there are significant region-specific factors for FDI performance in MENA and EU regions. We employ a panel data approach and use the inward FDI performance index as dependent variable, including both institutional and macroeconomic variables as FDI determinants. The results reveal similar impact of the economic factors but significant differences between the two regions with regard to institutional determinants particularly investment climate, government size and trade barriers. This leads to the conclusion that more appropriate policies are needed in the MENA region in order to develop a friendly economic and institutional environment to attract foreign investors.

Suggested Citation

  • Galego Aurora & Caetano José Manuel, 2012. "Institutional and Economic Determinants of FDI: A Comparison between the European Union and the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 8(1), pages 1-23, August.
    • Handle: RePEc:bpj:rmeecf:v:8:y:2012:i:1:n:1
    DOI: 10.1515/1475-3693.1297
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    2. Heba E. Helmy, 2013. "The impact of corruption on FDI: is MENA an exception?," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(4), pages 491-514, July.
    3. Kechagia, Polyxeni & Metaxas, Theodore, 2020. "Institutional quality and FDI inflows: an empirical investigation for Turkey," MPRA Paper 104309, University Library of Munich, Germany.
    4. Violeta Šabasevičienė & Virginija Grybaitė, 2014. "Main foreign direct investment factors as precondition of sustainable entrepreneurship: evidence from Lithuania, Central and Eastern Europe," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 1(4), pages 230-238, June.
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    7. Antonio Baez, 2014. "“A panel data analysis of FDI and informal labor markets”," IREA Working Papers 201404, University of Barcelona, Research Institute of Applied Economics, revised Feb 2014.

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    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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