Foreign direct investment inflow: The drivers and motivations in MENA Region

Abstract

Purpose ― Reasons why Multinational Enterprise (MNEs) engage in foreign direct investment (hereafter referred to as FDI) abroad have been of great interest to policy markets, academia and international portfolio investors. This examines FDI inflow motives to the Middle East and North Africa (MENA) region for the period 2005 to 2019. Design/methodology/approach ― This research paper applies both the static and dynamic panel methodologies such as SYS-GMM, fixed effects, and pooled OLS estimators to investigate the motivational factors of MNEs FDI inflows to MENA countries. Findings ― Although specificity applies to countries, estimated results suggest that MNEs in the MENA region are predominantly interested in serving both home and host markets. Other motives such as efficiency-seeking FDI vary across countries, indicating that FDI motives are not homogeneous among region members. This paper provides useful insight for both firms and host countries in the region. Originality/value ― This research paper investigates the factors that motivate MNEs to consider FDI decisions in MENA countries. Rather than investigate the individual countries within the region as done in existing literature, this research paper simultaneously examines MNEs' investment motivations in the MENA region. The findings are significant, plausible and in line with the economic development of most countries in the region.