Open AccessTheRole of Institutional Determinants in Attracting Foreign Direct Investment to Egypt: Empirical Study
Publication year - 2020
Publication title -
fwu journal of social sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.131
H-Index - 1
ISSN - 1995-1272
DOI - 10.51709/fw1272j/fall2020/5
Subject(s) - distributed lag , cointegration , foreign direct investment , language change , corporate governance , error correction model , economics , government (linguistics) , short run , exchange rate , quality (philosophy) , international economics , macroeconomics , monetary economics , econometrics , finance , art , linguistics , philosophy , literature , epistemology
This paper aims to explore the relationship between foreign direct investment (FDI) in Egypt, as a dependent variable,and selectedeconomic and institutional determinants for the period (1996-2018). The work attempts to bridge the gap created by previous empirical literature that failed to focus on critical institutional determinantsof FDI in developing countries, especially governance-related determinants. The study used the autoregressive distributed lag model (ARDL); to testthe Cointegration relationship between FDI and its determinants.Besides, the error correction model (ECM) wasused to explorethe short-run relationship. In light ofapplying the ARDL approach, the study concluded that while both market size and regulatory quality stimulatedFDI, the latter has been negatively affectedbytherealexchangerateandgovernment effectiveness. Moreover, the study revealed that inthe short-run, both regulatory quality and control of corruption inducedFDI in Egypt. These findings shed light on the crucial role that institutional factors can play in creating a more favorable FDI climate in Egypt.