Locational Drivers of FDI in MENA Countries: A Spatial Attempt

Hisarciklilar, Mehtap and Kayam, Saime Suna and Kayalica, Ozgur (2006): Locational Drivers of FDI in MENA Countries: A Spatial Attempt.

Abstract

This study aims to analyze the locational drivers of FDI, with an emphasis on the role of market potential in MENA countries. Considering that the market does not necessarily comprise of the host economy but also trade opportunities in the region and in the rest of the world, this study distinguishes the country-specific, regional and trade-related market potential of the host MENA country in attracting FDI. It also examines the neighboring effects in locational choice. Using a panel of 18 countries covering the 1980-2001 time period, the model is estimated by Maximum Likelihood estimation method incorporating the possible spatial autocorrelation in the disturbances. The results imply that FDI in the MENA region is market oriented; as well as aiming at the domesic market in the host economy, it also utilises trade opportunities within the region.

• Item Type: MPRA Paper
• Institution: Istanbul Technical University Faculty of Management
• Language: English
• Keywords: Foreign Direct Investment; market potential; MENA region; spatial econometrics
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models

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