FDI and economic growth in the GCC: Does the oil sector matter?

Mohamed Elheddad, Mohga Bassim, Rizwan Ahmed

Research output: Contribution to journalConference articlepeer-review

Abstract

This paper investigates the impact of economic sectors’ foreign direct investment (FDI) on economic growth by validating the resource curse hypothesis in the Gulf Cooperation Council (GCC) countries. Applying OLS (Fixed and Random effects), Instrumental Variables (IV) and Limited Information Maximum Likelihood (LIML) estimations, empirical results indicate that resource-FDI inflows hinder economic growth in the GCC economies, while non-resource FDI has an insignificant effect on growth. Moreover, the total Greenfield FDI inflows deter economic growth in GCC economies. These results give evidence on the crowding-out effect of resource-FDI. This paper opens new insights for policymakers in designing a comprehensive policy on direct FDI inflows (resource and non-resource) to stimulate growth for attaining sustainable economic development for the long run.

Original languageEnglish
Pages (from-to)178-190
Number of pages13
JournalEconomics and Business Letters
Volume10
Issue number3
Early online date2 Aug 2021
Publication statusPublished - 1 Sep 2021
EventSchool of Banking Conference: Contemporary Issues In Banking And Finance: Sustainability, Fintech And Uncertainties - University of Economics Ho Chi Minh City, Ho Chi Minh City, Viet Nam
Duration: 30 Jul 202031 Jul 2020
https://sites.google.com/ueh.edu.vn/sobc2020

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