Investment policies and determinants of FDI inflows : an analysis of the last two decades in five north African countries

Abstract

North Africa region is considered as one of the wealthiest areas due to (natural resource and strategic location) and “the weakness of economic indicators” in this area regarding investment and FDi represents a considerable challenge for governments and policymakers in these countries. This study examined the main determinants of FDi inflows in North Africa countries and evaluates the effectiveness of FDi related policies on attracting FDi inflows in a sample of five North African countries namely Algeria Egypt Libya Morocco and Tunisia. The empirical analysis of this thesis conducted at two related levels. Chapter six investigated the factors determining FDi inflows of North Africa countries using the annual dataset from the period 1996 to 2013. The regression results indicate that signing investment agreements and adopting more efficient investment policies are statistically significant and has a positive impact on FDi inflows growth in North Africa region. Additionally the trade liberalization policies and integration into global business have a positive and significant relationship with FDi inflows growth. The study also found that increasing the domestic investment in host countries attract more FDi. Chapter seven used a gravity model to examines the relationship between bilateral trade and FDi inflows in host countries (North Africa countries). And investigating the main determinants of bilateral FDi using a pooled time-series -cross-sectional regression method (10- years average over the period 2001-2010) for net FDi inflows in Five North African countries with 25 investment partners. The Findings asserted that economic size bilateral trade common language financial development of host countries tend to increase the bilateral FDi inflows between North Africa countries and other countries simultaneously having a common language between host and home countries was found to have a significant and positive impact on bilateral FDi between nations. however the bilateral distance between host and home countries has a negative impact on FDi.