Abstract
This study aims to explain the role of economic freedom in attracting foreign investments and thus raising the level of economic growth. Through a study based on a sample composed of the Gulf Cooperation Council (GCC) countries. A standard model consisting of GCC countries (Saudi Arabia, United Arab Emirates, Qatar, Kuwait, and Oman) was used during the period from 1995 to 2017. We based on the analytical descriptive and secondly, we used a multivariate analysis based on the panel unit root test, the cointegration and finally the regression Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) following the existence of a long-term integration, which includes the modern standard methods to determine the role of economic freedom in raising foreign direct investment and thus economic growth in the second stage. The research findings from GCC countries support the literature, suggesting that there are indeed some indications that greater levels of economic freedom support higher rates of economic growth in a country.
Highlights
The Gulf Cooperation Council (GCC) countries are generally characterized by the attractiveness of foreign direct investment (FDI) as they have advanced infrastructure and many energy sources
The coefficient trade openness is negative and statistically insignificant suggesting that the effects of economic freedom on economic growth are more apparent with a higher level of investment
This paper investigated the relationship between economic freedom, FDI and economic growth for a panel of GCC countries for the period 1995–2017
Summary
The Gulf Cooperation Council (GCC) countries are generally characterized by the attractiveness of foreign direct investment (FDI) as they have advanced infrastructure and many energy sources. Borensztein et al (1998) demonstrated that, in the host country, the scale of FDI depends on the availability of the stock of human capital They add that this impact can be showed negative in countries endowed with a low level of human capital. Lamsiraroj (2016) showed that the effect of domination exercised by the foreign firms can discourage the local firms to develop their own activities of Rand Another negative effect of the FDI can result from the excessive extraction of ores or the concentration of the production on one particular good which would engender a fall in export prices and a deterioration of the terms of exchange for the host country
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