Macroeconomic and Political Determinants of Foreign Direct Investment in the Middle East [report]

Robin Calver
2000 unpublished
This study argues that governments with sustained GDP growth, open markets, low country risk, high levels and low standard deviation of government performance, and few or no occurrences of war, will see larger levels of foreign direct investment (FDI) over time. Scholarship on the determinants of FDI variously argues the influence of GDP growth, the openness of a country's economy, a government's level of political capacity, the level of country risk, and the negative effects of inter-,
more » ... d extrastate conflict. These studies on the various effects on FDI, while providing insightful and substantial statistical results, fail to capture the simultaneous effects of macroeconomic, government performance, country risk, and war variables. The present study attempts to resolve this gap in the literature on FDI by proposing a multi-dimensional model of the combined effects of un-weighted macroeconomic, political, country risk, and war variables on FDI flows over time. The empirical results confirm the expected multi-dimensional nature of FDI flows over time and provide insight into the macroeconomic and political effects on regional and country-level yearly flows of FDI, as well as yielding some unexpected and counter-intuitive results of the role war plays on FDI flows over time. ii Dedication This study is dedicated to my grandparents James and Dorothy Calver, and Herbert and Agnes Worsdall. To my parents David and Deirdre Calver and my brother Duncan Calver. To my wife Rachael Roberts. A special dedication to my friends, past and present
doi:10.15760/etd.1074 fatcat:wzotdwk7fzgdvgss7azlts3shm