This paper aims to explore the relationship between foreign direct investment (FDI) in Egypt, as a dependent variable, and selected economic and institutional determinants for the period (1996-2018). The work attempts to bridge the gap created by
previous empirical literature that failed to focus on critical institutional determinants of FDI in developing countries, especially governance-related determinants. The study used the
autoregressive distributed lag model (ARDL); to test the Cointegration relationship between FDI and its determinants.
Besides, the error correction model (ECM) was used to explore the short-run relationship. In light of applying the ARDL approach, the study concluded that while both market size and regulatory quality stimulated FDI, the latter has been negatively affected by the real exchange rate and government effectiveness. Moreover, the study revealed that in the short-run, both regulatory quality and control of corruption induced FDI in Egypt. These findings shed light on the crucial role that institutional factors can play in creating a more favorable FDI climate in Egypt |
