A Panel Co-integration And Causality Analysis The Relationship Between Fdi, Openness Trade And Economic Growth Several Middle Eastern And North African Countries -as A Sample-

Abstract

This paper aims at analyzing the effect of Foreign Direct Investment (FDI) and trade openness on the economic growth of 11 developing countries (Algeria, Bahrain, Egypt, Iran, Jordan, Kuwait, Lebanon, Morocco, Oman, Saudi Arabia and Tunisia) based on annual panel data series from 1994 to 2017. This analysis was performed using fully modified OLS approaches (FMOLS) when the series of panels are co-integrated. Therefore, the relationship between Foreign Direct Investment (FDI) and trade openness to economic growth is too eminent in taking a great role within literature related to economics. The results clearly suggest that free trade and Foreign Direct Investment are a long-term source of gross domestic product growth in the countries of the Middle East and North Africa. Free trade is associated with a positive relationship with gross domestic product growth in (FMOLS) estimation, and a unidirectional causality in the sense of trade openness towards gross domestic product growth. Foreign Direct Investment is also associated with a positive relationship with the growth of gross domestic product in (FMOLS) estimation, which is a mutual causation, from Foreign Direct Investment towards the growth of gross domestic product and vice versa.