Escolar Documentos
Profissional Documentos
Cultura Documentos
Mohandeseen Campus
MBA
Group # 50A
(MIBA)
BY
Supervised by
Dr.Ashraf Elsafty
This paper was submitted in partial fulfillment of the requirements for the degree of
MAY 2017
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TABLE OF CONTENT
Contents
LIST OF FIGURES .................................................................................................................................... 4
LIST OF ABBREVIATIONS .................................................................................................................... 5
ACKNOWLEDGEMENTS ....................................................................................................................... 6
ABSTRACT ................................................................................................................................................. 7
CHAPTER 1: INTRODUCTION .............................................................................................................. 8
Historical Data about Egypt................................................................................................................... 9
Problem Definition ................................................................................................................................ 11
Significance of the study ....................................................................................................................... 15
Research Conceptual model and variables ......................................................................................... 16
Secondary data analysis ....................................................................................................................... 16
Research Variables ............................................................................................................................... 17
- Dependent variable: ............................................................................................................... 17
- Independent Variables: ........................................................................................................... 17
- Moderating Variables: ............................................................................................................ 18
RESEARCH LIMITATIONS.................................................................................................. 18
RESEARCH OBJECTIVES .................................................................................................... 18
RESEARCH QUESTIONS .................................................................................................................. 18
Major Question ................................................................................................................ 18
Minor Questions .............................................................................................................. 19
CHAPTER 2: LITERATURE REVIEW ................................................................................................ 20
2.1 Foreign Direct Investment and Economic Growth in Some MENA Countries ........................ 20
2.2 Foreign Direct Investment (FDI) Really Matter in Developing Countries ................................ 20
2.3 FDI flows and host country economic development .................................................................... 21
2.4 The effects of foreign direct investment on the host country's economic growth ..................... 22
2.5 The Effect of Foreign Direct Investment on Economic Growth ................................................. 23
2.6 The Effects of Foreign Direct Investments for Host Country’s Economy ................................. 24
2.7 Impact of FDI on Economic Development A Causality Analysis for Singapore ....................... 25
2.8 Foreign direct investment and growth: theory, evidence and lessons for Egypt ....................... 26
2.9 Foreign direct investment and economic growth: empirical analysis ........................................ 27
2.10 Foreign Direct Investment, Exports and Economic Growth: Some African Evidence ......... 28
2.11 Impact of FDI and Trade Openness on Economic Growth....................................................... 28
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2.12 Foreign Direct Investment, Country Capabilities and Economic Growth .............................. 29
2.13 Foreign Direct Investment, Financial Development, and Economic Growth: Evidence from
the Arab Countries ............................................................................................................................... 30
2.14 Does foreign direct investment cause economic growth ............................................................ 31
2.15 Foreign direct investment and growth: theory, evidence and lessons for Egypt..................... 32
2.16 Conclusion ..................................................................................................................................... 32
Chapter3: Theoretical Framework ......................................................................................................... 34
3.1 Introduction ..................................................................................................................................... 34
3.2 Problem Definition .......................................................................................................................... 34
3.3 Research objective .......................................................................................................................... 34
3.4 Theoretical Frame Work ................................................................................................................ 34
3.5 Research Variables ......................................................................................................................... 35
3.6 Research limitations........................................................................................................................ 36
3.7 Research Assumption ..................................................................................................................... 36
3.8 Research Questions ......................................................................................................................... 37
3.9 Research Hypothesis ....................................................................................................................... 37
3.10 Research Methodology ................................................................................................................. 38
3.11 Data collection ............................................................................................................................... 38
3.12 Finding ........................................................................................................................................... 39
References .................................................................................................................................................. 40
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LIST OF FIGURES
Figure 1.1 table for Egypt Finical and Economic Figures (2006-2016)
Figure 1.2 Plotting Egypt FDI Inflow from 20016 -2016
Figure 1.3 Plotting Egypt Growth rate from 2006-2016
Figure 1.4 Plotting Egypt Exporting Balance from 2006-2016
Figure 1.5 Plotting Egypt importing Balance from 2006-2016
Figure 1.6 Conceptual Model variables
Figure 2.7 different models and variable that was used at the literature
Figure 3.1: Proposed Theoretical Framework
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LIST OF ABBREVIATIONS
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ACKNOWLEDGEMENTS
I would like to take this part of my research to introduce my warm thanks to all professors
teachers and assistants whom encored me and guide me in addition to their support during the
past 2 years , they provide me with a great knowledge regarding different topics .
I would specially thank Dr. Ahmed Mabrouk for his assistant during MBA track and subjects
Also my deep and great thanks for Dr.Ashraf Elsafty for guiding me through the research topic,
Helping me through his simplified professional way across the difficult areas of the thesis
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ABSTRACT
Growth rate are considered one of the major scales and factors that measure the increase of the
economy health and the ability of the internal market to accept and migrate with new forces form
the global, although it’s a very essential and important figure for any country specially a
developing country like Egypt, it’s a must to understand the factors that is affecting growth rate
ratio and how to improve it and enhance all the variable that might lead to increase of that figure.
Knowing that the growth rate is mainly calculated from the balance of payment we claimed
during our research that some factors at the BOP is more important that others and some factors
will lead to a booming effect at the growth rate like the FDI,
This fact lead us to introduce the FDI as one of the biggest major factors that will influence the
growth rate through different axes that almost all the researches accept it as a factors influence
the FDI inflow and the growth rate
Market openness , investment laws will encourage the foreign investor to start a new business at
Egypt and with our knowledge about the best type of FDI that suite our economy we can push
this type of investors to invest at the most labor intensive mega project at Egypt
All that factor will directly affect the growth rate of Egypt to a higher level
The main expected outcome form the research is to confirm the relation between the FDI, growth
rate and through the support of some other important variables like the trade of balance, market
openness and investment law
Keywords: FDI, Economic Growth, balance of trade, Economy openness, investment law’s,
determines of the FDI
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CHAPTER 1: INTRODUCTION
Foreign direct investment (FDI) has proved to be mandatory during financial crises for every
development country with a direct impact to the people living and to the economy growth rate of
the nation through the production and the industrial spillover, controlling the importing of goods
and encouraging the goods exporting to create a balance of trade lead to a fast recovery from
most of the financial crisis,
Egypt faced an economic crises during and after the revelation and for more than 6 years the
government try to improve the factors with a healthy regime during this period , In addition to
the instability of the Egyptian growth rate starting 2011 after and during the Egyptian revolution,
the exporting of goods increase while importing decrease dramatically
Unstable economy with a high rate of fluctuation regarding the growth rate & government
spending in addition to high inflation rate with a very high unemployment percentage all this
factor lead to a hard time regarding the Egyptian economy that was considered to be a
developing country with a very high potential during the last era , through 2007 and 2008 a
growth rate was almost equal to 7.2% to currently during 2015/2016 it reached 3.3 with
expecting to be 4 present during 2017 , (economics, 2017), huge infrastructure mega project in
addition to the tourism and the new Suez canal all that’s lead the Speculators to predict a high
percentage of fluctuation during the coming years specially that according to the World Bank
last release forecasted that Egypt’s GDP growth rate expected to fall in 2017 , therefore
attracting FDI has become mandatory option to the Egyptian Economy (worldbank, 2016),
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Egypt considered as one of the oldest nation worldwide, it’s a presidential republic since and
after the revaluation of 1952 with a greater capital Cairo in addition to a 27 governorates runs
through a mixed legal system based on Napoleonic civil and penal law, Islamic religious law, the
judicial review of the constitutionality of laws by the Supreme Constitutional Court supervision.
The head of state is President Abdel Fattah al-Sese, who was approved through the national
election by referendum. The implementation of the state’s policy is formulated and supervised by
the Egyptian president himself. He is also the preeminent Head of the military armed forces. The
main executive branch of the state is the local government, which is composed of the cabinet,
and is directly chosen through the president. It is headed by the Prime Minister and supervises
the work of the Government .The highest administrative body in the Egyptian Republic is the
council of ministers. They are all responsible for the general policy of the state before the
People's Assembly, and each minister is responsible for the performance of his ministry.
(wikipedia, 2016)
The Egyptian ministry of finance is the main responsible of planning leading , controlling in
addition to budgeting the government of Egypt’s and the main responsible to handle the public
debt. This is carried out by preparing legislation, planning revenues and expenditures, managing
and supervising the government budget spending process and preparing a framework for
economic policy and development. (Finance, 2010)
The Central Bank of Egypt is the main monetary authority in Egypt. The bank's paid-up capital is
1000 million Egyptian pounds. According to the CBE records Its main duty to regulates all the
banks and its system to formulate and implement the Egyptian banking policy system , manages
gold and foreign exchange reserve , the CBE regulate and inforce the interest rate among all the
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banks , control and manage the Egyptian presence in the world foreign exchange market
supervise and approve the government spending and national payment system in addition to
managing the external and the internal government dept. banks and the banking system of Egypt
(CBE, www.cbe.org.eg/en/AboutCBE/Pages, 2016)
Unemployment rate reaches 12.7 percent by 2016 with increase equal to 5 percent during 2010
with higher rates among the youth and women in addition to massive increases in the population
growth rate almost 100M that lead to additional pressure at the internal infrastructure and
services demand , that directly slow down the economic growth (tradingeconomics., 2017) ,
during the last era Egypt witnessed a huge growth in terms of telecommunication, infrastructure
development and service with the encouragement of the Egyptian government that was trying to
encourage the small and medium organization to improve the mentioned sector at Egypt , The
government has made big improvement in the last couple of decades towards establishing the
country image as a potential hub in the region. Through a major infrastructure development and
huge projectors (worldbank, 2016)
Egyptian market considered to be a very big market with high rate of consumption regarding the
goods and the service specially the petroleum and the new innovated product, foods and clothes
also remains with a very high consumption rate among the Egyptian consumers , Tourism
considered as an important economic pillar of Egypt income , but during and after the revolution
it was severely hit by political instability . The total number of visitors in 2016 plummeted to 5.3
million from 9.3 million in 2015. (Encyclopedia., 2007) , (worldbank, 2016)
From other side the Suez Canal, which connects the Mediterranean Sea with the Red Sea
considered to be a big factor that influence the forging currency inflow , during 2015 the
government lunched a huge project to increase the capability of the canal by increasing its width
and depth to be able to increase the canal’s daily capacity from 49 vessels in 2014 to 97 in 2023,
and to push Egypt to be an international trading and logistics hub, The new canal is expected to
increase the traffic revenue of the canal from US$ 5.3 billion in 2015 to US$15 billion in 2023,
(Earth.esa, 2016), (economics, 2017)
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The government since the 2011 revolution, the industrial sector has been put at the forefront of
plans for economic growth. Creating new industrial zones, substantive training programs and
development plans along the Suez Canal corridor have all been committed as part of a strategy
to boost the manufacturing sector’s contribution to economic output over the next coming years .
It will know that the Egyptian industry sectors were developed and diversified during early
times. From agriculture sector that was the primary source of employment. Majority of the
population inhabited the Nile basin and were involved in agricultural production to industrial
nations with huge manufacturing ability through the new industrial zones that was created at 6 of
October and obor city the major Egypt industrial sector currently is the agriculture, automobile,
consumer electronics, still and consternation sector
The Egyptian graphical location in the north-eastern corner of Africa and south-western Asia.
Egypt is bordered by the Mediterranean Sea to the north, the Gaza Strip and Israel to the
northeast, the Red Sea to the east, Sudan to the south and Libya to the west with almost about 1
million km² , Egypt mainly divided to four major parts , the nile and delta and its extended from
north of the valley to the Mediterranean see an this parts divided to upper Egypt and lower Egypt
, the second part is the western desert it extend from the nile valley to Libyan border in the west ,
the there’d part is the eastern desert its extend from the nile valley to the red sea Suez gulf and
Suez canal , the last part is the red sea peninsula that part of Egypt very famous with the tourism
activity and its great nature regarding the desert and sea in addition to a huge amount of luxury
resort that attract the foreign visitors around the world (Fact-Book, 2016),
Problem Definition
Egypt before 2011 there was a great potential and expectations for the Egyptian economy to
grow, there has been a strong political transition following the Egyptian Revolution and the
removal of President Mubarak’s in 2011. After the Revolution period growth rate of the
economy has been slightly picking up, because of different reasons like real state and
manufacturing with increase in the foreign direct investment, although at the same time the
Egyptian tourism and the Suzie canal was not preforming good because of the internal instability
of the police department specially at Sinai , The instability caused by the revolution has almost
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seized FDI if not repelling already existing FDI stock. Large budget deficit, fast drain for the
foreign reserves, lack of tourism and huge losses in the Egyptian stock market continue to hinder
recovery. (CBE, BOP-Annual report , 2006-2016)
An alarming notifications is taking place among the public regarding large businesses especially
multinationals working in Egypt that stems from the marriage of politics and business during the
rule of the last regime.
As a result of the reduced activity , after the second revolution the Egyptian authority faced the
same continuing policy pressure in addition to more shortage of the foreign investment duo to
some Acts of terror , and huge investment with a very short time that lead to huge increase the
project expenses like Suez canal extension and the mega project for the internal roads
infrastructure , at the same time the there was a very contradicting policy between the fiscal and
the minatory systems in side Egypt , without a clear road map to the economic gross , and by the
end of 2016 the Central bank of Egypt decided to free floating the currency hoping that this
action will attract the foreign investor to Egypt although all the Economists predict a coming
decrease at the Egyptian growth rate during 2017 and 2018
Egypt need to keep an eye toward achieving sustainable environment to attract the foreign direct
investment that will lead to a direct impact at the Egyptian economy
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YEAR Egypt Trade Balance Egypt FDI Egypt BOP Growth Rate GDP
2006/07 -16290.6 11053.2 5282.3 7.1 132 165
2007/08 -23415.4 13236.5 5420.4 7.2 164 844
2008/09 -25173.3 8113.4 -3377.6 4.7 187 978
2009/10 -25120.0 6758.2 3355.7 5.1 214 630
2010/11 -27103.0 2188.6 -9753.9 1.9 231 100
2011/12 -34139.0 3982.2 -11278.4 2.2 260 153
2012/13 -30694.7 3753.3 237.0 2.1 255 199
2013/14 -34159.3 4178.2 1478.6 2.2 282 242
2014/15 -39060.4 6379.8 3724.9 3.3 296 123
2015/16 -38683.1 6932.6 -2813.0 4.5
Figuer 1.1 Egypt Finical and Economic Figures (2006-2016)
Central Bank of Egypt /Annual Report
All figures in (US.$m.)
Egypt FDI
14000.0
12000.0
10000.0
8000.0
6000.0
4000.0
2000.0
0.0
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
The above figure indicate the inflow for the foreign direct investment during 2006 and up to
2016 showing fluctuation during period specially during and after the Egyptian revolution
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Growth Rate
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
Figure 1.3 Plotting Egypt Egypt Growth rate from 2006 -2016
Data source Central Bank of Egypt (CBE, BOP-Annual report , 2006-2016)
All figures in (US.$m.)
The above figure indicate historical figures for growth rate of Egypt during 2006 and up to 2016
showing fluctuation during period specially during and after the Egyptian revolution
Export
35,000.00
30,000.00
25,000.00
20,000.00
15,000.00
10,000.00
5,000.00
-
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
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The above figure indicate the historical figures for the Exporting balance of Egypt during 2006
and up to 2016 showing the declining of the Exporting of goods starting from 2013 after the
second revaluation duo to the scarceness of the foreign currency
Import
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
-
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
The above figure indicate the historical figures for the importing balance of Egypt during 2006
and up to 2016 showing the increasing trend for the importing of goods starting from 2006
Knowing the importance of the foreign direct investment to the Egyptian economy health and its
direct to the growth rate of the nations in addition to knowing the relation between the exporting
and importing of goods and services and its direct impact to the Egyptian balance of payment
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will help and support the government policy to take the correct decision to encourage the FDI in
flow and to limit the importing of elastic goods and to encourage the internal industrialization
and internal manufacturing to be able to export goods with quality and high demand to the global
market .
Through analysing the secondary data trying to determine the relation between the variables
Variables correlation coefficient
Correlation coefficient Between Trade Balance /Growth Rate 0.637145509
Correlation coefficient Between Export /Growth Rate -0.13428616
Correlation coefficient Between Import /Growth Rate -0.72935339
Correlation coefficient Between FDI /Growth Rate 0.962565093
Research Variables
- Dependent variable:
Growth Rate: refer to the percentage of change of the growth rate variable within a specific time
period with the effect of the independent variable, growth rates indicate rate of growth of a
country according to its GDP and balance of payment
- Independent Variables:
1) foreign Direct Investment : foreign investment by a company or individual, in one country with
the purpose of business interest at another country its represented by different types such as
investment made by a company or individual in one country in business interests in another
country, in the form of either establishing business operations or acquiring business assets in the
other country, such as ownership or joint venture or strategic alliances , we will try to introduce
& to understanding the impact of the FDI to the growth rate of Egypt , through understanding the
behavior of change in the growth rate with the change of the FDI inflow to Egypt
- A strong positive relation exist between the FDI and the dependent variable , when the FDI
increase the growth rate increase
2) Good and service export proceeds: the percentage and the value of the goods and services that
is produced at the local market with the intention to be exporting to the global market with the
aim of generating profit with a foreign currency, the variable is introduced with the benefit of
Understand the effect of balance of the exports and its impact to the growth rate behavior,
- A positive relation exist between the Good and service export proceeds and the dependent
variable , when the Good and service export proceeds increase the growth rate increase
3) Good and service import proceeds: the percentage and the value of the goods and service that
is produced outside the local market and importing to fulfill the shortage and the need of the
consumers locally , the variable is introduced with the benefit of Understand the effect of balance
of the imports and its impact to the growth rate behavior,
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- A negative relation exist between the Good and service Import proceeds and the dependent
variable, when the Good and service import proceeds increase the growth rate decrease
- Moderating Variables:
- Economy openness : the internal market and economy openness , its directly impact both
positive and negative to both Exporting and Importing balance
- Government intervention policy’s : the government and the central bank intervention at
the Egyptian market that that encourage or discourage the foreign direct investors to
directly invest at Egypt , the government intervention affect the inflow of the FDI
Research Assumptions
Assumption 1: Research is limited to Arab republic of Egypt during the period 2006-2016
Research Limitations
Research Objectives
The research objective to explain the relation between the FDI at Egypt and its impact to the
growth rate taking in consideration the trade of balance of goods and services from both aspects
the importing and the exporting of goods trying to prove the direct relation between the 4
variables
Research Questions
Major Question
What are the variables that directly effect to Egyptian growth rate?
Claim: there are a 3 major variables that affect the growth rate of Egypt
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Minor Questions
1. What is the impact of the foreign direct investment to Egyptian growth rate from?
Claim: there are a direct positive strong relation between the FDI inflow and the increase of
the Egyptian Growth rate
2. What are the impact of the exporting of goods to the Egyptian growth rate and the balance of
payment?
Claim: there are a direct positive relation exporting of goods and the increase of the
Egyptian Growth rate
3. What are the impact of importing goods to the Egyptian growth rate and the balance of
payment 2011and up to 2016?
Claim: there are a direct negative relation importing of goods and the increase of the
Egyptian Growth rate
4. Does the economics and market openness affect the FDI , Exporting and Importing of goods
to the Egypt?
Claim: the market openness directly affect the 3 dependent variable
5. Does the government intervention policy affect the FDI inflow to Egypt
Claim: the government intervention directly affect the FDI inflow to Egypt
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2.1 Foreign Direct Investment and Economic Growth in Some MENA Countries: Theory
and Evidence
As it was defined by (Masry, 2015) and through his study and thorough evidence from some
developing countries like Egypt with the same economic conditions, he pointed the effect of the
foreign direct investment at the host countries, through his case study of Egypt and across the
period from 1961 up-to 2012 , the Egyptian economy faced 2 major changes through global
forces the Global financial crisis that began at 2008 in addition to the Arab spring that started at
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Keywords: economic growth; foreign direct investment inflows; absorptive capacity; host /
receiving country; home / source country. Technology spill over
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2.4 The effects of foreign direct investment on the host country's economic growth: theory
and empirical evidence
The researches though there data analysis for different developed and developing countries came
up with a finding and conclusion that Economic growth is not an automatically procedure, or
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Mov. 1 Mov. 2
to a several authors that already
tested the same finding and
concluded that is directly and significantly positive, they confirmed through their imperial
analysis the positive and direct effects of FDI on host country’s economic growth. . Through
their research they came up with another conclusion that absorbed from their literature and
survey that the majority doesn’t take into consideration the determines of the FDI claiming that
the growth rate increase could be more related to FDI in a direct greenfield investment or labour
intensive industry’s thy tried also to reverse the relation and to determine the way that growth
rate influence the inflow of the FDI (FORTE & MOURA, 2013)
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2.6 The Effects of Foreign Direct Investments for Host Country’s Economy
Keywords:: FDI, Growth rate , resource transfer effects, international trade, privatization
The researcher tried to point at the important of the FDI inflow for the Developing counties
especially with emerging economies or countries in transition period , taking in consideration a
very wide view to describe the impact of the inflow at the employment , technology , resources ,
management , and the Balance of payment and the growth rate stating that the successful stories
did a massive change at their FDI regime and followed best policies to attract the foreign direct
investment, claiming through his research that to maximum benefits of FDI for the host
Country will include technology, human capital in addition to balance of trade and improving
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the competitive business environment, further than that the economic benefits FDI can help the
improvement of environment and social
Mov. 4 Mov. 3
condition all the previous variable
Technology Competitiveness
contribute to improve the economic Spillover DV
The researcher take a case of one of the developing country that is Singapore during the period
from 1976 – 2002 at that time Singapore was an emergency country after getting out from a
different wars that lead to deficit at the BOP and global recession all around the company.
Through the paper he tried to shows the relationship between FDI and economic growth
Claiming through his analysis that both variables closely move together in the same direction
with a strong magnitude, his study examines the relationship between FDI and GDP in the using
some data analysis Granger causality and vector auto Regression proving through his analysis
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2.8 Foreign direct investment and growth: theory, evidence and lessons for Egypt
that the FDI enhance the economic growth of Egyptian determining that the attracting factor for
the FDI inflow would be the market size, openness, human capital , Infrastructure, in addition to
the efficiency of the financial sectors, growth rates, good considering the political stability the
main engine for the FDI inflow that impact the growth rate , also through giving examples for
some countries around the words with the same economic situation like Albania, Belarus,
Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Moldova, Poland,
And Romania, His paper finding that FDI was positively linked to growth in developing nations
like Egypt (Rady T. , 2012)
Key words: foreign direct investment, economic growth, panel regression analysis, trade
openness, human capital, technology
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growth rate mentioning that the countries that are using the trading correctly are most likely to be
successful in attracting the FDI inflow (Stancheva-Gigov, 2016)
2.10 Foreign Direct Investment, Exports and Economic Growth: Some African Evidence
Keywords: trade openness; foreign direct investment; economic growth; co-integration; Granger
causality.
The researcher through his paper and for the specific period from 1980-2010 he tried to analyse
and examine the effect of the market openness and the FDI and its direct impact to the growth
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between the FDI and the economic growth, the Human Capita
DV
rate and through a regression analysis results he claimed that the direct Effects of FDI are
stronger in countries with a higher level of developed institutions, that will be leaded by the
human capital and the infrastructure inside the institutions that will facilitate the business process
(Olofsdotter, 1998)
2.13 Foreign Direct Investment, Financial Development, and Economic Growth: Evidence
from the Arab Countries
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would be a more growth rated potential than FDI. Highlighting that through improving
investment laws and improving the economic and business institutional could lead to a better
FDI attraction to the host country’s specially the In countries with persistent economic reforms,
FDI itself could enhance will impact the financial development. (Omran & Bolbol, 2003)
Keywords: Emerging markets, foreign direct investment (FDI), Economic models, Economic
growth, emerging economies,
The researcher Purpose of his paper is to examine the relationship between inward FDI and
economic growth taking Southern African Mov. 3
Mov. 2
result show that there is a there a positive Mov. 1
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2.15 Foreign direct investment and growth: theory, evidence and lessons for Egypt
Mov. 3 Mov. 4
The researcher through his paper tried to revisits the
Economic DV
Human Capital
relationship between FDI and Economic growth of the Openness
2.16 Conclusion
Through the literature and the papers that was reviewed we find a different models that was
applied through a different research’s , although all the papers confirmed the positive relation
between the FDI and the growth rate at any host country that was revised through the research’s
there are a lot of variables that was different through every and each paper , every researcher
claimed that some variables are more important than others but from other hand almost all the
researcher’s confirmed that a good economic environment and government laws that encourage
the investors to directly invest at the host country’s will directly attract the FDI inflow and
improve the growth rate
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To understand the variables through the papers we can conclude them as follow
Model S Researcher PAPER Name Research Year Variable 1 Variable 2 Variable 3 Variable 4 Variable 5 Variable 6
Foreign Direct Investment
2.1 Abdel-Hameed M. Bashir and Economic Growth in 1999, 2002 FDI Growth rate Domestic Investment trading balance economic openness investment law
Some MENA Countries
A Does Foreign Direct
Investment (FDI) Really
2.2 Mohamed Masry 2015 FDI Growth rate economic openness investment law trading balance determines of FDI
Matter in Developing
Countries?
FDI FLOWS AND HOST
B 2.3 IMOLA DRIGĂ COUNTRY ECONOMIC 2011 FDI Growth rate economic openness investment law trading Laws Technology spillover
DEVELOPMENT
THE EFFECTS OF FOREIGN
DIRECT INVESTMENT ON
C 2.4 ROSA FORTE* THE 2013 FDI Growth rate economic openness Human capital Finical Sector Development determines of FDI
HOST COUNTRY’S
ECONOMIC GROWTH
The Effect of Foreign Direct
Mohammadreza
D 2.5 Investment on Economic 2014 FDI Growth rate Technology spillover Competitiveness
Mohammadvand Nahidi
Growth
The Effects of Foreign
E 2.6 Selma KURTISHI-KASTRATI Direct Investments for 2013 FDI Growth rate Technology spillover Human capital trading balance Competitiveness
Host Country’s Economy
Impact of FDI on Economic
F 2.7
Mete Feridun1 and Yaya Sissoko2
Development A Causality 2011 FDI Growth rate trading balance economic openness Human capital Technology spillover
Analysis for Singapore
Foreign direct investment
and growth: theory,
G 2.8 Tamer Rady 2012 FDI Growth rate Market Size Infrastructure Finical Sector Development Political stability
evidence and lessons for
Egypt
Foreign direct investment
H 2.9 ISKRA STANCHEVA-GIGOV1 and economic growth: 2016 FDI Growth rate Human capital investment law trading balance
empirical analysis
Foreign Direct Investment,
Exports and Economic
I 2.1 Yaya Keho 2015 FDI Growth rate trading balance Infrastructure
Growth: Some African
Evidence
Impact of FDI and Trade
Openness
Zaheer Khan KAKAR &
J 2.11 on Economic Growth: 2011 FDI Growth rate economic openness trading Openness
Bashir Ahmad KHILJI
A Comparative Study of
Pakistan and Malaysia
Figure 2.7 different models and variable that was used at the literature
Although all the above variables is effecting the FDI and the growth rate relation in with a
different addition variable that changed according to the country and the economic situation and
stability of the host country ,
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3.1 Introduction
The relation between the growth rate and the FDI the positively related to each other according
to the previous study’s especially at the developing countries like Egypt, the selected model for
testing is model A of (Bashir, 1999) and it was tested through (Masry, 2015) ,
The growth rate are one of the major indicator of the country economic health and tracking the
increase or decrease of that rate will lead to predict the economic trend of a country, although the
FDI is one of the major engines that drive the economic growth forward or backward according
to some variables that will be our concern to test and validate during the thesis
The research objective to explain the relation between the FDI at Egypt and its impact to the
growth rate taking in consideration the trade of balance the economic openness and how it will
encourage the FDI inflow in addition to the human capital and the investment laws , we will try
to prove the relation of all the mentioned factors and its direct impact to the growth rate of any
Host country .
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Foreign investment by a company or individual, in one country with the purpose of business
interest at another foreign country in the form of either establishing business operations or
acquiring business assets in the other country, such as ownership or joint venture or strategic
alliances , we will try to introduce & to understanding the impact of the FDI to the growth rate of
Egypt , through understanding the behavior of change in the growth rate with the change of the
FDI inflow to Egypt
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The internal market and economy openness , its directly impact both positive and negative to
both Exporting and Importing balance
The government and the central bank intervention at the Egyptian market that that encourage or
discourage the foreign direct investors to directly invest at Egypt , the government intervention
affect the inflow of the FDI
The type of the of the local industry’s that the FDI will be inject money at , is it a labor intensive
industrial based , service based , construction , etc …. , we will try to evaluate the relation of the
FDI with the type of investment and its effect to the local Growth rate of the host country
Minor Questions:
(MIRQ1) : Does The Investment laws directly impact and have affect at the relation between
the FDI and growth rate of Egypt
(MIRQ2) : Does The Investment laws directly impact and have affect at the retaliation between
the trading balance and growth rate of Egypt
(MIRQ3) : Does the economy openness directly impact and have affect at the relational of the
FDI and the growth Rate
(MIRQ4) : Does the economy openness directly impact and have affect at the relational of the
trading balance and the growth Rate
(MIRQ5) : Does the determines of FDI directly impact and have affect at the relational of the
FDI and the growth Rate
H2Ø : The Trade Of balance does influence the growth rate of Egypt
H2a : The Trade Of balance has a positive impact to the growth rate of Egypt growth rate of
Egypt
H3Ø : The Economy openness does influence the growth rate of Egypt
H3a : The Economy openness has a positive impact to the growth rate of Egypt
H4Ø : The Investment Laws does influence the growth rate of Egypt
H4a : The Investment Laws has a positive impact to the growth rate of Egypt
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H5Ø : The Determines of FDI does influence the growth rate of Egypt
H5a : The Determines of FDI has a positive impact to the growth rate of Egypt
Face -to -face interviews: directly communicates with the expertise in economic reforming at a
similar situation with the prepared questions. This will enables the research to acquire valued
information during the conversation with the respondent. This method will ensures the quality of the
obtained data and increases the response rate. In addition to another methods of the Qualitative data
collections like Observations and deep data analysis for the case form different country’s with the same
situation
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3.12 Finding
Through our research we tried the highlight the direct relation between the FDI and the growth
rate of the hosting country taking Egypt as a case study and example form other side we tried to
point that there are some major moderating variable that directly affect this mentioned relation
like the market openness and the investment law and how they attract the FDI to the host country
, that is directly reflect to the growth rate ratio , a healthy market with an encouraging investment
law will attract the suitable type of FDI inflow to Egypt although during the literature review the
previous researches confirmed the relation and we are claiming that the relation is strong ,
according to this finding the government should legislate laws to attract the foreign currency
inward to Egypt through a suitable FDI that is introduced through a labor intensive project or
investment to be able to spin the wheel of the economy and to post the economy to a better stage
, labor intensive projects like construction and infrastructure mega project will affect the working
man power that will lead to healthy market that from other side will increase the demand the will
encourage more FDI inflow , taking in consideration that the trading balance is a main player for
the relation of the FDI and the growth rate , as we mentioned encouraging the FDI will lead to
growth rate although engorging the exports of the FDI product will lead to an extra foreign cash
inflow Although if the FDI goods and services are meant to be for the local market that will lead
a weak effect at the topline of the growth rate ,
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