Determinants of foreign direct investment in MENA countries (1980-2015)

Investment is the main source of economic growth and development. Therefore, the study of investment attraction’ factors is one of the most important fields of study for economists. Identifying determinants of foreign direct investment (FDI) attraction can be useful for developing countries. This paper examines determinants of FDI in the Middle East and North Africa (MENA) region during 1980-2015. It uses a panel data model with random effects in order to separate country-specified differences. The results of estimations indicate that degree of openness, rate of return on investment, economic growth, human capital and broad money have significant and positive effects on FDI, but expenditure on research and development (R&D) and corruption are insignificant in explaining FDI.