Abstract
This article aims to explore the causal relationship between economic growth and foreign direct investment (FDI). It draws upon various theoretical and empirical studies that investigate the impact of FDI on economic growth. Additionally, we assess the dynamic relationship between FDI and economic growth in a sample of 22 countries in the MENA region. The estimation of this dynamic relationship for the years 1985-2020 across these countries is conducted using the Generalized Method of Moments (GMM). Furthermore, the Dumitrescu and Hurlin (2012) test is employed to scrutinize the presence or absence of a causal direction in panel data between FDI and economic growth, approximated by gross domestic product (GDP). Our findings suggest the existence of a unidirectional relationship from FDI to economic growth.
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