Vol.16, No.1 | [Article] The Impact of Imports and Foreign Direct Investment on Total Factor Productivity:Evidence from the Arab World

This paper empirically investigates the effects of two noteworthy economic trends in TFP growth recently observed in the Arab world, i.e., the increasing trend of inward FDI and the decreasing trend of imports from technologically advanced countries. Multiple panel regression analyses, based on the long-term panel dataset of 10 selected Arab states from 1991 to 2019, show that inward FDI flows are a significantly positive factor on TFP growth in non-oil dependent Arab countries. However, it was observed to be an insignificant variable in the case of oil dependent Arab countries. In sharp contrast, another independent variable in the study, imports from high-income countries, appears to have a positive association with the TFP growth in oil dependent Arab countries. However, this study could not find any empirical evidence supporting a significant association between imports and TFP growth in non-oil dependent Arab countries.