The current assessment of foreign direct investment in the Middle East and North African region

Abstract

This research aims to assess the growth and the current status of foreign direct investment (FDI) in a sample of 16 Middle East and North African (MENA) countries over the period 1984–2011. Our goal is to give some insight on the importance of the different factors affecting foreign direct investment (FDI). To reach our goals, we will examine the growth of FDI over time in the MENA region as compared to that of other regions. Second, we will determine the most important factors that promote FDI to the region. Our empirical results reveal the instrumental factors that help to promote FDI in the area. We find that the lag in GDP, market size, and political risk have a positive and direct effect on FDI while financial risk has a negative effect on FDI. FDI motives, however, vary greatly among oil-rich resource countries and the non-rich resource countries in the MENA region.