حدود سعر الصرف المثلی الجاذبة للإستثمار الأجنبی المباشر إلی مصر Optimal exchange rate limits that attract foreign direct investment to Egypt

Abstract

Foreign direct investment is important in bridging the gap between the investment rate and the saving rate in Egypt. The problem of the research was to identify what are the limits of the optimal exchange rate, which represent an attractive factor for foreign direct investment to Egypt? The researcher used the methodology of the threshold regression model. After making several attempts to overcome the problems of double linearity in the data, to exclude unacceptable results, to test the impact of each of the exchange rate X1, the inflation rate X2, the political stability X3, and the state budget deficit X4, and based on the data of the World Bank, it was found that the optimal system the exchange rate is between less than 5.92 pounds to the dollar and greater than or equal to 5.42 pounds to the dollar, which means that there is a positive effect of the exchange rate in the previous limits on attracting foreign direct investment, and the previous effect varies according to the value of the exchange rate, while the effect is before reaching the threshold value was by about 0.34, the effect on the exchange rate boundary increased between 5.92 and 5.42 to reach 1.04, which is statistically significant. In all cases, the flexible exchange rate had a positive effect on foreign direct investment, as all transactions were positive. The research recommended the necessity of continuing the policy of attracting foreign investment, as it is the real solution to the Egyptian economic problem. The need to continue of floating the exchange rate that Egypt has followed since late 2016.