The Dynamic Interactions among Foreign Direct Investment, Economic Growth, Exports and Exchange Rate: Evidence from Algeria

Mohammed Moussaoui, Sumaya Zirar

Abstract


This study aims to investigate the determinants of the FDI in the Algerian economy over the period (1996-2012). A reduced-form fourth-variable VAR model (FDI, economic growth, exports, and real effective exchange rate) is utilized. Dickey-Fuller tests showed that all variables are stationary at first difference.
Various tests have been utilized. The Granger-Causality, which determines the direction of causality among variables, it shows that there is no causality relationship among FDI and growth, and unidirectional causality relationship running from exports to FDI, while a bidirectional causality relationship between FDI and REER. Also, the Cointegration test that shows the existence of a long-run relationship among the variables. Two major tools were used for analysis: the Variance Decomposition and the impulse response function, the results show that exports have a positive impacts on the FDI, but the REER has a negative impacts on the FDI.

Keywords


Economic growth, foreign direct investment, exchange rate, exports, Vector Autorregression, Algeria

Full Text:

PDF

Refbacks

  • There are currently no refbacks.