The Impact Of Foreign Direct Investment On Economic Growth In An Era Of Globalization: A Var Analysis For North African Countries

The purpose of this work is to empirically examine the effects of foreign direct investment (FDI) and on economic growth of North African economies in the era of globalization. The study of this relationship has largely been analyzed in the literature. Our empirical investigation uses VAR model approach with quarterly data during the period 1980-2010. Results suggest that FDI plays a positive role in boosting the economic growth of North African countries. They also emphasize that these countries has been relatively successful over the last decade in attracting FDI inflows that have not shown a significant performance. In the other hand, impulse response functions indicate that the existence of external financial shocks can be followed by depreciation in domestic and external variables as well as in FDI flows and real GDP fluctuations. Consequently, this can be harmful to the economic activity; that’s why North African countries should reinforce their economies through the establishment a monetary, commercial, and financial union between them as well as the adoption of a common currency and the creation of a free trade area.