Analysis Of The Impact Of Fdi On Gdp In Algeria

Abstract

This study examines the impact of Foreign Direct Investment (FDI) on economic growth in Algeria, Morocco, Tunisia, and Libya using panel models, including Pedroni’s panal cointegration approach, the Johansen Fisher Panel Cointegration test, and the Granger Causality Test, over the period from 1970 to 2023. The results show a long-term relationship between FDI and GDP, without clear causality, indicating an indirect influence. Algeria shows a weaker effect due to its heavy reliance on hydrocarbons, while Morocco benefits more from FDI due to its relatively diversified economy. Libya also experiences weaker impacts due to political instability, and similarly, Tunisia is affected by economic instability. Furthermore, weak business environments and a lack of reforms limit these countries’ ability to fully benefit from FDI. The study recommends improving investment conditions, promoting economic diversification, and strengthening political and economic stability. It ultimately concludes that FDI can support growth, but its impact depends on the policies and institutional framework of each country.