The Impact of Foreign Direct Investment on Economic Development Indicators in Egypt

Document Type : Original Article

Authors

1 Associated Professor, Cairo University

2 General Agency of Practical Education, Kuwait

Abstract

This study aimed to verify the effects of foreign direct investment in Egypt, and to conduct a standard measure of the impact of foreign direct investment (FDI) on economic development indicators in Egypt, which are represented by the GDP growth rate, national income (NI), inflation (INF), and unemployment rate (UNemp), total capital formation (TCF). The study assumed a basic hypothesis, which is: "foreign direct investment has a positive impact on economic development indicators in Egypt". The measurement was done using multiple regression model to measure the impact of foreign direct investment on economic development indicators in Egypt. The results of the study indicate that the relationship between foreign direct investment from Egypt and both GDP and the NI is statistically significant direct relationship, despite its inconsistency with economic theory. This may be due to the exit of many foreign investments as a result of economic and political changes during the period 2011-2018, which encouraged local production from national resources and thus increased GDP and NI. In addition, the relationship between inflow foreign direct investment and both inflation and unemployment rates is consistent with economic theory, as with the increase in investment, inflation increases and the unemployment rate decreases. According to the results the research recommends, encouraging local production due to its positive impact on GDP and NI, and launching a package of investment incentives to attract foreign direct investment due to its positive impact on inflation and unemployment.

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Alexandria Science Exchange Journal
Volume 45, Issue 4
OCTOBER- DECEMBER
December 2024
Pages 595-602

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