FDI And Economic Growth In CEE And MENA Countries: A Tale Of Two Regions

Abstract

This paper examines the effect of foreign direct investment (FDI) on economic growth in two different regions: Central and Eastern Europe (CEE) and the Middle East and North Africa (MENA). The main findings of our analysis suggest that FDI has a positive effect on growth only in EU accession countries while the effect of FDI on growth in MENA and non-EU accession countries is negative. Candidacy to EU membership is considered as a driving force for stronger commitment and more serious reforms that may have led to the positive effect of FDI on growth.