The Infrastructure and Foreign Direct Investment: The Case of Selected Arab Countries

Abstract

Objectives: This study aims to investigate the role of infrastructure in attracting foreign direct investment in selected Arab countries during the period 2007-2019 using annual data. The sample of the study utilizes panel data representing thirteen countries of the Arab region.
 Methods: The study employs the ordinary least square (OLS) regression model to analyze the panel data. The study model includes the infrastructure index, trade openness, real GDP growth, and the corruption index as independent variables. At the same time, the net flow of foreign direct investment has been identified as a dependent variable.
 Results: The study’s results indicate a direct and statistically significant relationship between infrastructure, GDP growth, and trade openness to FDI flows, while the results indicate a statistically significant inverse relationship between the corruption index to the selected Arab countries.
 Conclusions: The study’s variables may be considered important determinants for attracting foreign capital represented by foreign direct investment. Furthermore, Arab countries still need more projects to improve infrastructure quality.