Determinants of foreign direct investment in the Middle East and North Africa region: evidence from balanced panel data analysis

Purpose : this study investigates factors influencing foreign direct investment (FDI) inflows to the Middle East and North Africa (MENA) region. Approach/design: using a balanced Panel data from 24 MENA economies covering 1980-2022 we employ econometric techniques (unit root, cointegration, FMOLS, DOLS, AMG, CCEMG) to evaluate the impacts of market and resource-seeking motives, institutional, government policies (macroeconomic level), and political risk on FDI inflows into MENA region. Findings: The long-term results suggest that market size, low corruption, government effectiveness and exchange rate contribute to FDI inflows while natural resources availability, role of law and voice and accountability deters FDI inflows to MENA. Contrary, political stability and regulatory quality factors has no significant effects on FDI inflows. Originality/Value: the study has potential implications for boosting FDI inflows into MENA region MENA such as: Policymakers of MENA economies should adopt stable monetary policies, implement policies and regulations to Promote private sector development, improve institutional quality and maintain macroeconomic stability. Diversification of economies and reduction of reliance on natural resources are essential for long-term FDI attraction. Additionally, green innovation should be encouraged by spending more on R&D, green technology and improving policies regarding the rule of law to create a good investment environment. Future Research: Further research is needed to explore the specific mechanisms through which these factors influence FDI inflows and to assess the potential impact of other variables, such as technological advancements and regional integration.