Determinants of Sectoral and Sub-Sectoral FDI: Evidence from the MENA Region

Abstract

Ignoring the heterogeneity of determinants across sectoral and sub-sectoral FDI begets flawed inferences in the mainstream literature. Significant drivers of FDI inflows vary across sectors and sub-sectors. Using UNCTAD Database of FDI from 2004 o 2018, we run GMM, Fixed Effects, and 3SLS estimations across a global sample of 198 countries and a regional sample of 17 the Middle East and North African (MENA) countries. We select the common determinants of FDI in the literature and re-visit their stylized evidence of significance and magnitude across four main FDI sectors, total, primary, secondary and tertiary, as well as across 29 subsectors. Our results confirm the divergence of the magnitude, sign, and significance of the determinants across sectors and countries’ samples.

Keywords: FDI, GMM, 3SLS, MENA

JEL Classification: E61, F41, F32