Policy Research Reports
The Determinants of Foreign Direct Investment in MENA Countries: An Extreme Bounds Analysis
No.
0421
Date
August, 2004
Topic
F5. International Relations, National Security, and International Political Economy
F. International Economics
The determinants variables of FDI inflows are examined by applying extreme bounds analysis to a cross-sectional sample encompassing data on 18 MENA countries. With the GDP growth rate serving as the free variable, eight others are tried as the variables of interest in combination with three other variables. The results reveal that only one variable is robust when traditional EBA is used. However, when restricted EBA is used, the results based on the 60 per cent of the regressions with the highest R2 reveal three more robust variables. Some explanations for the results are put forward.
Research Fellows
Imad Moosa
Professor of Finance, RMIT, Melbourne, Australia.