IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v92y2026ics1544612325026078.html

Can digital economy development attract foreign investment? Evidence from Middle Eastern countries

Author

Listed:
  • Yao, Wen

Abstract

This study examines the impact of digital economy development on attracting foreign investment in 16 Middle Eastern countries from 2003 to 2023. It constructs a digital economy development index comprising four dimensions—infrastructure diffusion, technology adoption, innovation output, and human capital—using principal component analysis, with net inflows and stock of foreign direct investment as the dependent variables. Both benchmark regression and robustness tests indicate that digital economy development has a significant positive effect on attracting foreign investment to Middle Eastern countries. Mechanism analysis shows that the digital economy indirectly attracts foreign investment by promoting financial development. Heterogeneity analysis further reveals that the digital economy in countries with higher levels of government governance has a stronger positive effect on foreign investment attraction. The study provides empirical evidence for Middle Eastern countries to enhance their attractiveness to foreign investment through digital economic transformation.

Suggested Citation

  • Yao, Wen, 2026. "Can digital economy development attract foreign investment? Evidence from Middle Eastern countries," Finance Research Letters, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:finlet:v:92:y:2026:i:c:s1544612325026078
    DOI: 10.1016/j.frl.2025.109358
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325026078
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.109358?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    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:eee:finlet:v:92:y:2026:i:c:s1544612325026078. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    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.