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The law of growth and attraction: an endogenous model of absorptive capacities, FDI and income for MENA countries

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  • Alaya MAROUANE
  • Dalila NICET-CHENAF
  • Eric ROUGIER

Abstract

In this paper, we build a structural model of growth and we estimate it on panel data. We go further than the previous studies of Bende et al. (2000, 2003) or Li & Liu (2005), because we not only control for the endogenity of FDI towards growth, but we also control for the endogenity of FDI towards the other variables (trade openness, domestic investment, human development) that are likely to increase the effects of foreign investments on growth through the absorption capacities building. We show that this model brings in new and interesting results about the interactions between attraction, FDI and growth in MENA countries (Middle East and North Africa countries).

Suggested Citation

  • Alaya MAROUANE & Dalila NICET-CHENAF & Eric ROUGIER, 2008. "The law of growth and attraction: an endogenous model of absorptive capacities, FDI and income for MENA countries," Cahiers du GREThA (2007-2019) 2008-27, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    • Handle: RePEc:grt:wpegrt:2008-27
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    More about this item

    Keywords

    FDI; Human capital; Growth; simultaneous equations; MENA;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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