Effective Factors on Absorbing Foreign Direct Investment (FDI) in MENA Region

Subject Areas : Labor and Demographic Economics

Sanaz Khatabi ¹ , Akbar Komijani ² , Teymour Mohamadi ³ , Abbas MemarneJad ⁴

1 - Student
2 - Full Professor at Department of Economic, Tehran University
3 - Full Professor at Department of Economic, Tehran University , Tehran,
4 - عضو هیات علمی واحد علوم وتحقیقات

Received: 2017-06-07 Accepted : 2017-06-07 Published : 2017-05-22

Keywords: Good Governance, MENA Region, F2, Classification JEL: F, F21. Keywords: Foreign Direct Investment,

Abstract :

Abstract The purpose of this paper is to investigate the effective factors associated with FDI inflows to MENA region (11 selected countries in Middle East and North Africa).  The two-stage least squared pooling method was used for selected MENA countries to analyze the data for 2002-2014.  Based on the results of analysis, positive effect of economic growth, rate of inflation, and market openness and a negative effect of good governance on foreign direct investment obtained.  The results, also, showed that countries with fixed exchange rate regime were more successful in attracting FDI inflows. Based on the findings of this study, and to attract FDI inflows, MENA member countries should implement policies aimed at, improving public’s perceptions of governance, decreasing the inflation, increasing economic growth, creating stable foreign exchange rate regimes, and increasing trade openness.

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