Exploring Links between FDI Inflows, Energy Consumption, and Economic Growth: Further Evidence from MENA Countries

Abstract

This study aims to examine the nexus between economic growth, FDI inflows and energy consumption on a panel of 17 countries using a i®growth modeli¯ framework and simultaneous-equation models estimated by the generalized method of moments (GMM) over the 1990-2012 period. We also implement these empirical models for 17 countries selected on the basis of data availability. They include: (a) 12 Middle Eastern countries, namely: Saudi Arabia, Qatar, Oman, Kuwait, Lebanon, United Arab Emirates, Iraq, Turkey, Iran, Syria, Jordan and Yemen, (b) 5 North African countries, namely: Egypt, Morocco, Tunisia, Algeria and Libya. Our results indicate that there is a bidirectional causal relationship between FDI inflows and economic growth, as between well as energy consumption and economic growth. Besides, there is a unidirectional causal relationship between energy consumption to FDI inflows for the global panel. This implies that the increase of energy consumption increases the FDI inflows for individual and collective countries.