FDI and Growth in the MENA Countries: Are the GCC Countries Different?

African Governance and Development Institute WP/16/015

42 Pages Posted: 28 Jun 2016

See all articles by Mouna Gammoudi

Mouna Gammoudi

Laboratoire REGARDS-URCA

Mondher Cherif

University of Reims Champagne-Ardenne

Simplice Asongu

African Governance and Development Institute

Date Written: June 25, 2016

Abstract

This paper examines the relationship between Foreign Direct Investment (FDI) and per capita Gross Domestic Product (GDP) in the Middle East and North Africa (MENA) region for the period 1985-2009. The empirical evidence is based on an endoeneity-robust Generalised Method of Moments. Results show that the effect of FDI on per capita income in the Gulf Cooperation Council (GCC) countries is positive but negative in Non-GCC countries. Results also reveal that in contrast to the GCC countries, the financial openness policy in the Non-GCC countries have reduced the benefits of FDI on growth, this finding is explained by the fact that most of the Non-GCC countries that have engaged in the process of financial reforms have poor quality of institutions. These results are confirmed with both annual data and five year average data.

Keywords: FDI, growth, GMM, financial openness, Institutions

JEL Classification: C52; F21; F23; O40; P37

Suggested Citation

Gammoudi, Mouna and Cherif, Mondher and Asongu, Simplice, FDI and Growth in the MENA Countries: Are the GCC Countries Different? (June 25, 2016). African Governance and Development Institute WP/16/015. Available at SSRN: https://ssrn.com/abstract=2800642 or http://dx.doi.org/10.2139/ssrn.2800642

Mouna Gammoudi

Laboratoire REGARDS-URCA ( email )

51096 Reims Cedex
France
0786109400 (Phone)

Mondher Cherif

University of Reims Champagne-Ardenne ( email )

51096 Reims Cedex
France

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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