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Determinants of FDI inflows to Arab economies

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  • Omar G. Aziz
  • Anil V. Mishra

Abstract

The paper studies location determinants of foreign direct investment (FDI) to 16 Arab economies over the period from 1984 to 2012, by employing Arellano--Bover/Blundell--Bond linear dynamic panel data estimation. We find that market size, trade openness, preferential trade agreements and financial development have significant positive impact on FDI inflows to Arab economies. FDI in Arab economies appears to be resource seeking since the total oil supply variable is positive and significant. The paper finds that better institutions and educated labour force may play a key role in attracting FDI inflows. We suggest that Arab economies should sequence their economic policy measures with the institutional ones, beginning with a focus on privatization and trade liberalization, and subsequently shift to improvement in economic growth.

Suggested Citation

  • Omar G. Aziz & Anil V. Mishra, 2016. "Determinants of FDI inflows to Arab economies," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(3), pages 325-356, June.
    • Handle: RePEc:taf:jitecd:v:25:y:2016:i:3:p:325-356
    DOI: 10.1080/09638199.2015.1057610
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    References listed on IDEAS

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    1. John H. Dunning, 2002. "Theories and Paradigms of International Business Activity," Books, Edward Elgar Publishing, number 2423.
    2. Mustapha Rouis & Steven R. Tabor, 2013. "Regional Economic Integration in the Middle East and North Africa : Beyond Trade Reform," World Bank Publications - Books, The World Bank Group, number 12220.
    3. Mustapha Rouis, 2013. "Regional Economic Integration in the Middle East and North Africa," World Bank Publications - Reports 20566, The World Bank Group.
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