DETERMINANTS OF EGYPTIAN ARAB INTER-INVESTMENTS: GRAVITY MODEL EVIDENCE

Year 2020, Volume: 3 Issue: 1, 161 - 178, 15.06.2020

Mohamed Abdelhameed Ahmed Mohamed Eid Naaimy Faisal

Abstract

The research uses the gravity model to assess the flows of investments between Egypt and Arab countries and identifies the most important factors influencing them by using the time series data regression. Results revealed that the growth of Egyptian FDI outflows to Arab countries is expected to be influenced by Egypt and Arab countries’ GDP, Per capita GDP for Arab countries and distance. Improving indicators such as Corruption perception, Business environment, Investment attractiveness, Infrastructure, and Market size in Arab countries is considered very crucial for the development of Egypt’s FDI outflows to Arab countries. On the other hand, Egypt and Arab countries’ GDP, distance, and Egypt’s population are expected to influence Egypt’s FDI inflows from Arab countries, while indicators such as Competitiveness, Corruption perception, Political stability, Business environment, Investment attractiveness, and Market size are seen to be very important for Egypt to consider for attracting FDI inflows from Arab countries.

Keywords

Egyptian Arab inter-investments, Gravity Model

Supporting Institution

Faculty of Agriculture, Fayoum University, Egypt

DETERMINANTS OF EGYPTIAN ARAB INTER-INVESTMENTS: GRAVITY MODEL EVIDENCE

Abstract

Bu araştırma, Mısır ve Arap yatırımları arasındaki yatırım akışlarını değerlendirmek ve zaman serisi veri gerilemesini kullanarak onu etkileyen en önemli faktörleri belirlemek için yerçekimi modeli yaklaşımını kullanmaktadır. Sonuçlar, Mısır DYY çıkışlarının Arap ülkelerine büyümesinin Mısır ve Arap ülkelerinin GSYİH'sından, Arap ülkeleri için kişi başına GSYİH'sından ve mesafeden etkilendiğini ortaya koydu. Arap ülkelerinde Yolsuzluk algısı, İş ortamı, Yatırım çekiciliği, Altyapı ve Pazar büyüklüğü gibi göstergeleri iyileştirirken, Mısır'ın Arap ülkelerine DYY çıkışlarının gelişmesi için çok önemli olduğu düşünülmektedir. Öte yandan, Mısır ve Arap ülkelerinin GSYİH, uzaklık ve Mısır nüfusunun Mısır'ın Arap ülkelerinden gelen doğrudan yabancı yatırım girişlerini etkilemesi beklenirken, Rekabetçilik, Yolsuzluk algısı, Siyasi istikrar, İş ortamı, Yatırım çekiciliği ve Pazar büyüklüğü gibi göstergeler Mısır'ın Arap ülkelerinden DYY girişlerini çekmek için çalışmasında çok önemli olduğu düşünülüyor. Mısırlı karar vericinin, bu göstergelerin iki bölüme ayrıldığı Mısır'ın yatırım çekiciliğini arttırmak için üstesinden gelebileceği birçok olumlu faktör vardır, ilki GSYİH, Pazar büyüklüğü gibi uzun vadeli ve maliyetli ulusal planlar gerektirir. altyapının iyileştirilmesi ve ikincisinin, Rekabet Edebilirlik, Yolsuzluk algısı, Politik istikrar, İş ortamı ve Yatırım çekiciliği göstergelerinin iyileştirilmesi gibi kısa vadeli planlara ihtiyacı vardır. Bu nedenle Mısırlı karar vericiler politikalarını kısa vadeli planlara yöneltmeli, bu da sonuçlar hızlı gözüküyor ve uzun vadeli planlarla birlikte daha fazla Arap yatırımı çekmede olumlu bir etkiye sahip olacak.

Keywords

Arap yatırımları, Yerçekimi Modeli

References

• Anderson, J. E. & Wincoop, E.V. (2003). Gravity with gravitas: a solution to the border puzzle. American Economic Review, 93(1), 170-192.
• Anderson, J. E. (2016). The Gravity Model of Economic Interaction. Boston College and NBER. https://www2.bc.edu/james-anderson/GravityModel.pdf
• Arab Countries and FDI, Social Research Center, The American University in Cairo, available at: http://www1.aucegypt.edu/src/globalization/Arab_FDI.htm
• Arab Investment & Export Credit Guarantee Corporation, http://dhaman.net/en/
• Bayoumi, T. & Eichengreen, B. (2007). Is regionalism simply a diversion? Evidence from the evolution of the EC and EFTA. In T. Ito & A. O. Krueger (Eds.), Regionalism versus Multilateral Trade Arrangements (pp. 141–168). Chicago, NBEREASE Volume 6, University of Chicago Press. http://www.nber.org/papers/w5283.pdf
• Bengoa, M. and Sanchez-Robles, B., (2003). Foreign direct investment, economic freedom and growth: new evidence from Latin America. European journal of political economy, 19(3), pp. 529-545.
• Coval, J., and T., Moskowitz. (1999). Home bias at home: local equity preference in domestic portfolios. Journal of Finance, Vol. 54, pp. 2045- 2073.
• Dima, B. (2008). Economic and socio-politic freedoms: are these connected to the foreign direct investments? Analele Ştiinţifice ale Universităţii “Alexandru Ioan Cuza” din Iaşi. Ştiinţe economice, (55), pp. 42-57.
• Eaton, J. and A. Tamura. (1994). Bilateralism and Regionalism in Japanese and U.S Trade and Direct Foreign Investment Patterns. Journal of the Japanese and International Economies, 8: 478-510.
• Egger, P, and Winner, H. (2006). How Corruption Influences Foreign Direct Investment: A Panel Study. Economic Development and Cultural Change, Vol. 54 ,No. 2, pp. 459-486.
• Ghosh, S. and H. Wolf. (1999). The Geography of Capital Flows. In: Edwards, S. (Ed.), Capital Inflows to Emerging Markets. University of Chicago Press, Chicago.
• Globerman, S. and D. Shapiro. (2002). Governance Infrastructure and U.S. Foreign Direct Investment. Journal of International Business Studies. 34. 19-39.
• Hassan, S.S. (2015). Economic Institutions and the Outward FDI Location Strategies of Emerging Market Multinational Business Groups: Evidence from Central and Eastern European Countries. Review of Economics and Institutions, 6(1), pp. 1-41.
• Hausmann, R, and Fernandez-Arias, E. (2000). Foreign Direct Investment: Good Cholesterol?. Inter-American Development Bank, Mimeo.
• Kapuria-Foreman, V., (2007). Economic freedom and foreign direct investment in developing countries. The Journal of Developing Areas, 41(1), pp. 143-154.
• Khanna, T. and Palepu, K., (2000). The future of business groups in emerging markets: Long-run evidence from Chile. Academy of Management journal, 43(3), pp. 268-285.
• Laabas, B., Abdmoulah, W. (2005). Determinants of Arab intraregional foreign direct investments. Working paper No. 0905, The Arab Planning Institute, Kuwait.
• Linnemann, H. (1966). An econometric study of international trade flows (Master Thesis), Netherlands School of Economics, Netherlands. Available from Google Books.
• Mohammed, R., Al-Adel. (2003). Investing in the Arab Region and Confronting Current Tensions. Council of Ministers Information and Decision Support Center, League of Arab States.
• Naggar, S. (1989). Investment Policies in Arab Countries, Fundamental Issues. Arab Fund for Economic and Social Development, Arab Monetary Fund, Kuwait.
• Nasser, S. Aathira, P. (2018). Trends in trade and investment policies in the MENA region. Background Note, MENA-OECD Working Group on Investment and Trade, MENA-OECD competitive programme, available at: http://www.oecd.org/mena/competitiveness/WGTI2018-Trends-Trade-Investment-Policies-MENA-Nasser-Saidi.pdf
• Quazi, R., (2007), Economic freedom and foreign direct investment in East Asia. Journal of the Asia Pacific Economy, 12(3), pp. 329-344.
• Shelaby, A , Mohamed, M , Salah, S. (2018). The Potential of Bilateral Trade Between Egypt and Nile Basin Countries: A Gravity Model Approach. Alanya Akademik Bakış , 2 (2) , 135-145.
• Tinbergen, J. (1962). Shaping the World Economy: Suggestions for an International Economic Policy. New York, USA: The Twentieth Century Fund.
• Wei, J. (2000). How is taxing corruption on internal investors. The Review of Economics and Statistics, Volume 82, issue 1, pp.1-11.
• Wheeler, D., and A. Mody. (1992). International investment location decisions. The case of U.S. firms. Journal of International Economics, 33: 57-76.
• World Bank, World Development Indicators, https://data.worldbank.org/data-catalog/worlddevelopment-indicators, 2018.
• www.distancefromto.net/countries.php
• Zghidi, N., Mohamed Sghaier, I. and Abida, Z. (2016). Does Economic Freedom Enhance the Impact of Foreign Direct Investment on Economic Growth in North African Countries? A Panel Data Analysis. African Development Review, 28(1), pp. 64-74.