The effect of foreign direct investment (FDI) on economic growth: The case of AMU

Abstract

This study analyses the impact of foreign direct investment (FDI) on economic growth (GDP) in the Arab Maghreb Union (AMU). For this purpose, it uses Angel Granger cointegration method for the period from 1980-2021. The estimation results show that these two variables are cointegrated. We found that FDI has a significant positive impact on economic growth, which confirms that FDI is an important factor in promoting Maghreb economic growth. The causality test show that there exists a directional causality from GDP to FDI in AMU.