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Foreign Direct Investment and Economic Growth in the Arab Region: The Case of Knowledge Spillover Effects

Author

Listed:
  • Nayef Al-Shammari
  • Huda Al-Rashid

Abstract

This research aims to focus on how institutional barriers in the Arab region may account for losses in FDI inflows along with their potential technology spillover effects, as well as to show how the deficiency of absorptive capacities serve as an important factor for attracting inflows. The analysis relies on endogenous growth models at an aggregate regional level and a microeconomic firm-level. Findings based on linear OLS regressions, reveal a positive correlation between improved institutional factors and potential FDI spillovers, with significance varying in certain countries. Policy implications involve having targeted FDI policies to enhance absorptive capacities, improving information asymmetry to reduce corruption, and enhancing the labor market regulatory framework to improve human capital development as an incentive for FDI inflows.

Suggested Citation

  • Nayef Al-Shammari & Huda Al-Rashid, 2017. "Foreign Direct Investment and Economic Growth in the Arab Region: The Case of Knowledge Spillover Effects," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(1), pages 106-118, January.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:1:p:106-118
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    References listed on IDEAS

    as
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    3. Galina Hale & Cheryl Long, 2011. "Are There Productivity Spillovers From Foreign Direct Investment In China?," Pacific Economic Review, Wiley Blackwell, vol. 16(2), pages 135-153, May.
    4. Sufian Eltayeb Mohamed & Moise G. Sidiropoulos, 2010. "Another Look At The Determinants Of Foreign Direct Investment In Mena Countries: An Empirical Investigation," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(2), pages 75-95, June.
    5. Taglioni, Daria & Winkler, Deborah, 2014. "Making Global Value Chains Work for Development," World Bank - Economic Premise, The World Bank, issue 143, pages 1-10, May.
    6. Kinda, Tidiane, 2010. "Investment Climate and FDI in Developing Countries: Firm-Level Evidence," World Development, Elsevier, vol. 38(4), pages 498-513, April.
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    8. repec:wbk:wbpubs:16390 is not listed on IDEAS
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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