Studying the Effect of Foreign Direct Investment on Economic Growth in Greater and Traditional Middle East Countries
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Abstract
This article tries to study whether foreign investment in the Greater and Traditional Middle East leads to economic growth. We have selected 21 countries of this zone for the time period 1980‐2008. Due to lack of endogenous relationship between variables, the two equations have been estimated separately. FDI affects economic growth directly and indirectly. Indirect effect means interaction term. Infrastructures and economic stability have a special significance in foreign investment attraction. Furthermore, oil extraction has a positive effect on foreign investment attraction and economic growth while technology gap has a negative effect on FDI and GDP variables.
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References
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Journal of International Business Studies, 19(2): 219‐233.
The World Bank Group., www.worldbankgroup.org
The World Bank., www.data.worldbank.org
UNCTAD., www.unctad.org
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Wheeler, D. and A. Mody., (1992) “International Investment Location Decisions: the Case of US Firms”, Journal of International Economics 33: 57‐76.
Xu, B., (2000) “Multinational Enterprises, Technology Diffusion, and Host Country Productivity Growth”, Journal of Development Economics 62, 477‐493.
Agosin, MR., and Ricardo Mayer., (2000)“Foreign Investment in Developing Countries: Does it Crowd in Domestic Investment?”, UNCTAD Discussion Paper No 146, Geneva: UNCTAD.
Ahmad M.H., Alam S. And Butt M.S., (2003)“Foreign Direct Investment, Exports, and Domestic Output in Pakistan”, The Pakistan Development Review 42:4 pp. 715‐723
Aitken, B. J., and A. Harrison., (1999) “Do Domestic Firms Benefit from Direct Foreign Investment?
Evidence from Venezuela”, American Economic Review 89: 605‐618.
Alfaro L., A. Chanda, S. Kalemli‐Ozcan and S. Sayek., (2003)”FDI and Economic Growth: The Role of Local Financial Markets”, Journal of International Economics, forthcoming.
Asiedu, E., (2002), “On the determinants of foreign direct investment to developing countries: is Africa different?” WorldDevelopment 30, 107–119.
Barba Navaretti., G. and A. Venables., (2004) “Multinational Firms in the World Economy”. Princeton: Princeton University Press.
Barro, R., Mankiw, G., and Sala‐i‐Martin, X., (1995) “Capital Mobility in Neoclassical Models of Growth”, American Economic Review, Vol. 85, No. 1 pp. 103‐115
Barro., and Sala‐i‐Martin, (1995)”Economic Growth”, Mc Grow‐Hill, Chap. 5.
Behname, Mehdi., (2008) “Les stratégies de la localisation dʹentreprise et la réactualisation de la politique industrielle: étude appliquée a la France“, Thèse de doctorant a lʹUniversité de la
Sorbonne nouvelle.
Behname., (2011) “Determinants of foreign direct investment in Iran”, Management and Economics conference, Iran, Miane
Behname., (2011) “The relationship between growth, foreign direct investment and trade in Mena countries: A causality test”, SIBR, Bangkok, Thailand, (16‐18 June)
Behname., (2011) “Determinants of Foreign Direct Investment of the Greater Middle East Countries”,
EconAnadolu, Eskisehir, Turkey, (15‐17 June).
Behname., (2011) “Foreign Direct Investment and Economic Growth: Evidence from Southern Asia”, EBES, Istanbul, Turkey, (1‐3 June).
Benhabib, S., & Spiegel, M., (1994) “The role of human capital in economic development evidence from aggregate cross‐country data”, Journal of Monetary Economics, 34, 143‐173.
Blomstrom, M., (1986) “Foreign Investment and Productivity Efficiency: The Case of Mexico”, Journal of International Economics 15, 97‐110.
Borensztein, E., J. De Gregorio, and J‐W. Lee. (1998) “How Does Foreign Direct Investment Affect Economic Growth?” Journal of International Economics 45: 115‐35.
Carkovic, M., Levine, R., (2005) “Does foreign direct investment accelerate economic growth?” In:
Moran, T., Graham, E., Blomström, M. (Eds.), “Does Foreign Direct Investment Promote Development?” Institute for International Economics, Washington, DC, pp. 195–220.
Costantini, Valeria., Martini, Chiara .,(2010) “The causality between energy consumption and economic growth: A multi‐sectoral analysis using non‐stationary cointegrated panel data.” Energy Economics 32 , 591–603
De Gregrio, J., (1992) “Economic Growth in Latin America”, Journal of Development Economics, Vol. 39 pp. 59‐84.
Falki., N., (2008) “Impact of foreign direct investment on economic growth in Pakistan”, Lecturer COMSATS Institute of Information Technology, 43600, Attock Campus, Pakistan
Ghatak, A. and Halicioglu, F., (2006) “Foreign direct investment and economic growth; some evidence
from across the world”, MPRA Paper 3563
Gorg, H. and D. Greenaway., (2002) “Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?” Research Paper 2001/37, Globalisation and Labour Markets Programme, at Leverhulme Centre for Research on Globalisation and Economic Policy, Nottingham.
Greene, W., (2008), Econometric Analysis, 6th Edition, Prentice Hall
Hanson, G. H., (2001)” Should Countries Promote Foreign Direct Investment? “G‐24 Discussion Paper
No. 9. New York: United Nations.
Haddad, M. and A. Harrison., (1993) “Are There Positive Spillovers from Direct Foreign Investment?” Journal of Development Economics 42: 51‐74.
IMF., www.imf.org
Jun, K. W and Singh, H., (1996).”The determinants of foreign direct investment in developing
countries”, Transnational Corporations 5: 67–105.
Kugler, M., (2006) “Spillovers from Foreign Direct Investment: Within or Between Industries”, Journal
of Development Economics, forthcoming.
Lipsey, R. E., (2002) “Home and Host Country Effects of FDI”, NBER Working Paper 9293.
Nelson, R., & Phelps, E., (1966) “Investment in humans, technological diffusion, and economic growth”. The American Economic Review, 56(1/2), 69‐75.
Richet Xavier., (2006) ”Economie de l’Entreprise “, Hachette, Paris, p. 149.
Richet., (2002), ” Nouvelles Economies de Marché et Stratégies des Firmes Multinationales “, Revue Régions et Développement, N° 16, p. 223‐245
Richet., (1992) “Les Economies Socialistes Européennes”, Armand Colin, Paris.
Richet., (1997) “ L’investissement direct étranger dans les PECO et leur impact sur le comportement
des entreprises ”, in Guerraoui Driss et Richet Xavier., (1997),“Les investissements directs
étrangers : Facteurs d’attractivité et de localisation”, L’Harmattan, Paris.
Shabbir T., And Mahmood A., (1992)”The Effects of Foreign Private Investment on Economic Growth
in Pakistan”, The Pakistan Development Review 31:4 pp.831‐841
Tallman, S., (1988) “Home Country Political Risk and Foreign Direct Investment in the United States”,
Journal of International Business Studies, 19(2): 219‐233.
The World Bank Group., www.worldbankgroup.org
The World Bank., www.data.worldbank.org
UNCTAD., www.unctad.org
Weil, D., (2004), Economic Growth. Boston: Addison‐Wesley.
Wheeler, D. and A. Mody., (1992) “International Investment Location Decisions: the Case of US Firms”, Journal of International Economics 33: 57‐76.
Xu, B., (2000) “Multinational Enterprises, Technology Diffusion, and Host Country Productivity Growth”, Journal of Development Economics 62, 477‐493.