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Institutional Clusters and FDI Flows to the MENA Region

In: Empirical Studies on Economics of Innovation, Public Economics and Management


  • Wasseem Mina

    (United Arab Emirates University)


The empirical literature on the institutions-FDI nexus has treated the influence of institutions individually despite the correlation among them. This is a conceptual shortcoming. To overcome this limitation, we cluster institutions using Principal Component Analysis (PCA). We apply PCA to ICRG institutions for 17 Middle East and North Africa countries during the period 1984–2011. Three institutional clusters have been extracted: stability and order, quality of public administration, and presence of democratic systems. Using feasible generalized least squares estimation methodology, estimates show that stability and order and the presence of a democratic system have a positive influence on FDI flows, while the quality of public administration has a surprisingly negative influence.

Suggested Citation

  • Wasseem Mina, 2017. "Institutional Clusters and FDI Flows to the MENA Region," Eurasian Studies in Business and Economics, in: Mehmet Huseyin Bilgin & Hakan Danis & Ender Demir & Ugur Can (ed.), Empirical Studies on Economics of Innovation, Public Economics and Management, pages 243-252, Springer.
  • Handle: RePEc:spr:eurchp:978-3-319-50164-2_14
    DOI: 10.1007/978-3-319-50164-2_14

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    Cited by:

    1. Federico Carril-Caccia & Juliette Milgram Baleix & Jordi Paniagua, 2019. "The foreign direct investment-institution nexus in oil-abundant countries," Working Papers 1903, Department of Applied Economics II, Universidad de Valencia.
    2. Simplice A. Asongu & Vanessa S. Tchamyou & Ndemaze Asongu & Nina Tchamyou, 2018. "The Comparative African Economics of Governance in Fighting Terrorism," Research Africa Network Working Papers 18/055, Research Africa Network (RAN).


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