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Foreign Direct Investment, Financial Markets and Growth Dynamics in MENA Oil Producing Countries: A Panel Investigation

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  • Kevin O. Onwuka
  • Taha Chaiechi

Abstract

The objective of this paper is to examine whether foreign direct investments (FDI) in extractive sector enhances growth, using data from seven MENA oil producing countries; namely Bahrain, Kuwait, Oman, Qatar, United Arab Emirates, Saudi Arabia and Iran over the period 1980 to 2004. We employ fixed effects estimation technique to estimate the coefficients of our models. The main findings are: First, the effect of FDI is very small, and it can have positive spillovers in the host countries if there are adequate absorptive capacities – well developed financial markets and human capital. Second, the financial markets are inadequate to spur growth and enhance the role of FDI in the growth process in MENA oil producing countries. The paper opines that policy focus should be towards improving the absorptive capacities, as growth should evolve internally, not externally.

Suggested Citation

  • Kevin O. Onwuka & Taha Chaiechi, 2013. "Foreign Direct Investment, Financial Markets and Growth Dynamics in MENA Oil Producing Countries: A Panel Investigation," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 2(2), pages 1-9.
    • Handle: RePEc:spt:fininv:v:2:y:2013:i:2:f:2_2_9
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    Cited by:

    1. Omar G. Aziz, 2022. "FDI inflows and economic growth in Arab region: The institutional quality channel," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1009-1024, January.
    2. Alina Taran & Marilena Mironiuc & Maria-Carmen Huian, 2016. "Examining The Influence Of Some Macroeconomic Factors On Foreign Direct Investments," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 18, pages 159-182, December.

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