ANOTHER LOOK AT THE DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN MENA COUNTRIES: AN EMPIRICAL INVESTIGATION

The paper is concerned with the analysis of the main determinants of foreign direct
investment in MENA countries. The estimation is run on the determinants of FDI in our
sample which consist of 36 countries. 12 of these countries were in MENA countries and
another 24 were the major recipients of FDI in their respective regions in developing
countries. By employing a panel data methodology the study investigates whether the
determinants of FDI are similar to the other FDI receiving developing countries. The study
reveals that the key determinants of FDI inflows in MENA countries are the size of the host
economy, the government size, natural resources and the institutional variables. The paper
concludes that, countries that are receiving fewer foreign investments could make
themselves more attractive to potential foreign investors. So, the policy makers in the
MENA region should remove all barriers to trade, develop their financial system and build
appropriate institutions.