Determinants of Foreign Direct Investment in MENA countries: an empirical analysis

This paper contributes to the literature on the determinants of foreign direct investment in the MENA region by providing empirical evidence on the relative importance of the manufacturing and services sectors to the non-GCC and GCC countries. Panel data analysis for fifteen MENA countries spanning the period from 1980 to 2003 provides evidence of the heterogeneous nature of the MENA region. The results show that FDI in the non-GCC nations is linked to the expansion of the manufacturing sector whereas for the GCC countries there is a strong association between inward FDI and the services sector. These results have policy implications since the drivers of FDI to the manufacturing sector are different from those to the services sector.