Proceedings of the 3rd Business & Management Conference, Lisbon

INSTITUTIONS, FOREIGN DIRECT INVESTMENT, AND ECONOMIC GROWTH IN NORTH AFRICAN COUNTRIES

MHAMED ALI KHEMAKHEM, ZOUHEIR ABIDA

Abstract:

This contribution investigates the causal interactions between foreign direct investment (FDI), economic freedom and economic growth in a panel of 4 countries of North Africa (Tunisia, Morocco, Algeria and Egypt) over the period 1980 - 2012. Using System Generalized Method of Moment (GMM) panel data analysis, we find strong evidence of a positive link between FDI and economic growth. We also find evidence that economic freedom appear to be working as a complement to FDI and, moreover, that the effect of FDI is more pronounced in the presence of the economic freedom variable. This means the countries promote greater freedom of economic activities gain significantly from the presence of multinational corporations (MNCs).

Keywords: Foreign direct investment, Economic freedom, Economic growth

DOI: 10.20472/BMC.2016.003.010

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