Volume 17, Numéro 17, Pages 19-29
Recent empirical literature suggests that foreign direct investment (FDI) have positive impact on economic growth through the process of technological diffusion. This paper proposes a new approach to testing for the existence of a relationship between foreign direct investment (FDI) and economic growth in Algeria for the analysis of long-run relations over the period of 1980-2014. The empirical analysis in this study is based on the bounds testing approach of co-integration, is introduced originally by (Pesaran & Shin, 1999) and further extended by (Pesaran & al, 2001), In order to verify the relationship between Foreign Direct Investment and economic growth in Algeria. The results suggest that FDI have a positive impact on economic growth in the long-run. The results further suggest FDI can be deemed to be catalysts for economic growth in Algeria an increase in one unite in FDI leads to increase by 5% in GDP.
Foreign Direct Investment, Economic Growth, Long Run, Bounds Testing Approach.
Belal Ibrahim Abdelrasoul