The Role of Investment on Economic Growth; An Empirical Case of Iraq For the Period of 2004 to 2020

Abstract

This paper employs time series techniques to analyse the effect of foreign direct investment and national investment on economic growth in Iraq. The study uses secondary annual data over the period 2004-2020. The gross domestic product )GDP( is the dependent variable, and foreign direct investment )FDI( and national Investment )NI( are the explanatory variables. The empirical analysis starts with run ordinary least square )OLS(. The result of Augmented Dickey Fuller )ADF( and Phil- lips Perron )PP( test illustrates that the series are non-stationary in the level form, however station- ary in the first difference. The study further utilises the Johansen cointegration test whereby it finds the variables are cointegrated and there is a long run relationship between dependent and indepen- dent variables. The results demonstrates that foreign direct investment has statistically significant positive impact on gross domestic product by almost 0.1013, meanwhile, national investment has positive impact on Iraqi gross domestic product with 0.0555.