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UNU-WIDER Institutional Reforms Debate and FDI Flows to MENA Region

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A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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WP/50 Institutional Reforms Debate and FDI Flows to MENA Region: Does One ‘Best’ Fit All?

The paper revisits the policy debate on institutional reform approaches to property rights protection and empirically examines it in the context of FDI flows to the Middle East and Northern Africa region (MENA).Using panel data on 11 MENA countries for the period 1991–2007 and adopting feasible generalized least squares estimation methodology, the paper finds a positive influence of improvement in the risk of investment expropriationin non-Gulf Cooperation Council (GCC) MENA countries and of bilateral investment treaties (BITs) in GCC countries. The joint influence of domestic institutional functions and BITs is positive in specifications containing investment expropriation risk and government stability in non-GCC MENA countries, and corruption in GCC countries. Results have important policy implications for the institutional reform approach to be adopted.
Publisher:
UNU-WIDER
Series:
WIDER Working Paper
Volume:
2011/50
Title:
WP/50 Institutional Reforms Debate and FDI Flows to MENA Region: Does One ‘Best’ Fit All?
Authors:
Wasseem Michel Mina
Publication date:
September 2011
ISBN 13 Print:
978-92-9230-417-1
Copyright holder:
© UNU-WIDER
Copyright year:
2011
Keywords:
property rights protection, bilateral investment treaties, foreign direct investment, institutional reforms, MENA, heterogeneity
JEL:
F21, K33, O16, O17, O19
Project:
New Directions in Development Economics
Sponsor:
UNU-WIDER acknowledges the financial contributions to the research programme by the governments of Denmark (Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).
Format:
online

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