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Foreign Direct Investment and Economic Growth: Simultaneous Equation Model Case of Southern Mediterranean Countries (SMC)


  • aidi, mohamed


In this work we study the effect of FDI on the economies of the South Mediterranean countries. Taking into account the positive effects and starting from the establishment of a simultaneous equation model applied to 8 countries, we tried to demonstrate the mechanisms through which FDI acts on economic growth. The estimation of our model shows that the level of human capital exports and to a lesser extent domestic investment, are the most prominent factors in creating positive effects. However, these results, while important, remain weakly motivating to generate positive growth or at least to reduce the negative effects of FDI.

Suggested Citation

  • aidi, mohamed, 2019. "Foreign Direct Investment and Economic Growth: Simultaneous Equation Model Case of Southern Mediterranean Countries (SMC)," MPRA Paper 97306, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:97306

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    More about this item


    Foreign Direct Investment; Economic Growth; Simultaneous Equation Model;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth


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