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Foreign Direct Investment-Economic Growth Nexus


  • Nedra Baklouti

    () (University of Sfax)

  • Younes Boujelbene

    () (University of Sfax)


In this paper investigates the relationship between foreign direct investment and economic growth. On the one hand the effect of FDI on the economies of the MENA region, and, on the other hand, the impact of the economic growth of these countries on the attractiveness of FDI. Our objective, in this study, is to investigate the interrelationships between economic growth and FDI by using panel data models with simultaneous equations by Generalized Method of Moments (GMM) for the period 1998-2011. Our results show that there is bidirectional causality between economic growth and FDI. This implies that economic growth and FDI attractiveness are complementary. These empirical perspectives are particularly attractive to politicians because they help them build sound economic policies to sustain economic development and improve their level of attractiveness. This study aims to contribute to the exiting literature by determining the relationship between FDI and growth by three aspects. Firstly, few scientific papers treat this relationship only in the theoretical framework. Secondly, few scientific papers treat this relationship in the MENA region. Finally, previous studies had found that the nexus FDI-growth is mixed.

Suggested Citation

  • Nedra Baklouti & Younes Boujelbene, 2016. "Foreign Direct Investment-Economic Growth Nexus," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 2(12), pages 136-145, April.
  • Handle: RePEc:dug:actaec:y:2016:i:2:p:136-145

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    References listed on IDEAS

    1. Lorenzo Pellegrini & Reyer Gerlagh, 2004. "Corruption's Effect on Growth and its Transmission Channels," Kyklos, Wiley Blackwell, vol. 57(3), pages 429-456, August.
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    3. A. Bende-Nabende & J. L. Ford & B. Santoso & S. Sen, 2003. "The interaction between FDI, output and the spillover variables: co-integration and VAR analyses for APEC, 1965-1999," Applied Economics Letters, Taylor & Francis Journals, vol. 10(3), pages 165-172.
    4. Dzhumashev, Ratbek, 2009. "Is there a direct effect of corruption on growth?," MPRA Paper 18489, University Library of Munich, Germany.
    5. Hejazi, Walid, 2009. "Does China receive more regional FDI than gravity would suggest?," European Management Journal, Elsevier, vol. 27(5), pages 327-335, October.
    6. Noel Johnson & Courtney LaFountain & Steven Yamarik, 2011. "Corruption is bad for growth (even in the United States)," Public Choice, Springer, vol. 147(3), pages 377-393, June.
    7. Anwar, Sajid & Sun, Sizhong, 2011. "Financial development, foreign investment and economic growth in Malaysia," Journal of Asian Economics, Elsevier, vol. 22(4), pages 335-342, August.
    8. Soltani Hassen & Ochi Anis, 2012. "Foreign Direct Investment (FDI) and Economic Growth: an approach in terms of cointegration for the case of Tunisia," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 2(4), pages 1-13.
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