Foreign direct investment (FDI) is a crucial ingredient of the global economy. In the Persian Gulf, FDI is a major source of economic growth, employment, technology, and productivity. Because of these benefits, attracting FDI in the Persian Gulf region has become a key element of strategies promoting economic development. Natural resources and environmental policy in host countries may affect the FDIeconomic growth relationship. There has been much dispute as to whether economies that are open and those with more natural capital and lax environmental policy grow faster. This paper examines whether natural resources and environmental policy in Persian Gulf countries alter the relationship between FDI and Persian Gulf’s economics growth. We estimate a linear dynamic panel-data model using data from Persian Gulf countries over the period 1980–2012.The results show that the impact of arable land, forest area and the interaction between FDI and environmental policy on economic growth is negative, but renewable internal freshwater resources flows, mineral depletion and energy use have a positive effect.
Topics in Middle Eastern and North African Economies
Middle East Economic Association and Loyola University Chicago
Asghari, Maryam; Hilmi, Nathalie; and Safa, Alain, "FDI Effects on Economic Growth: The Role of Natural Resource and Environmental Policy". Topics in Middle Eastern and North African Economies, electronic journal, 16, Middle East Economic Association and Loyola University Chicago, 2014, http://www.luc.edu/orgs/meea/
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