The Relationship between Growth, Foreign Direct Investment and Trade in MENA Countries: A Causality Test

Abstract

The present research studies the causality relationship between the three variables of foreign direct investment (FDI), export (EX) and gross domestic product (GDP) for the period from 1977 to 2009 using Panel model for Mena countries. Having performed the variables stationarity test, Pedroni co-integration test has been done which indicates that there is no long-run relationship between variables. The test results indicate that there is a bidirectional causality relationship between GDP and FDI and these two reinforce each other and there is a causality relationship from FDI to EX in this zone.