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Trade and Foreign Exchange Liberalization,Investment Climate, and FDI in the MENA Countries

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  • Marie-Ange VEGANZONES-VAROUDAKIS

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • SEKKAT

Abstract

Despite some progress in economic policy – in macroeconomic stability in the 1980s, and in structural reforms in the 1990s – the MENA countries have failed to attract foreign direct investments (FDI). This may be due to several factors. In this paper we empirically verify from a panel of 72 countries – among which are 8 MENA economies – that, during the 1990s, the low level of trade and foreign exchange liberalization compared to East Asia and Latin America played a determinant role in the low level of total FDI in the MENA economies, particularly in manufacturing. The paper also highlights the role of other factors, such as physical infrastructure, political environment and macroeconomic conditions, in explaining total FDI flows to the different regions. These results stress the importance of accelerating the pace of reform in the MENA economies.

Suggested Citation

  • Marie-Ange VEGANZONES-VAROUDAKIS & SEKKAT, 2004. "Trade and Foreign Exchange Liberalization,Investment Climate, and FDI in the MENA Countries," Working Papers 200430, CERDI.
    • Handle: RePEc:cdi:wpaper:852
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F15 - International Economics - - Trade - - - Economic Integration
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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