The relationship between foreign direct investment, exports and economic growth in Egypt, Tunisia and Morocco during the period (1970-2010) "an econometric comparative study"

The research aims to verify the relationship between FDI, exports and economic growth; in order to estimate the quantitative relationships, and the causal trends
between these variables in Egypt, Tunisia and Morocco. This aim can be achieved by studying the relationship between these three variables in the economic
literature; studying the development of these variables over the last four decades, and then using the Johansen co-integration approach and the VECM to estimate
the long-run relations. Finally, the causality relations are estimated, using Granger causality test, to verify the causal relationships among the variables.
The development of the external sector in the three countries under study illustrates the relative weakness of FDI inflows to these countries on both the
internal and external level, even though these FDI inflows increased in the last two decades after the application of economic reform programs. Therefore, the
role of the FDI inflows to the three countries was very limited and cannot achieve the development goals in these countries, which is reflected in low exports as a
percentage of GDP in Egypt, Morocco and Tunisia, compared to the regional levels. Therefore, the level of economic performance in the three countries was
low, represented by the low rate of real output and the average output per capita, as well as its decline over time.
The results of the causal relationships in the short term illustrate the important effect of the FDI inflows and the exports on economic growth in the three
countries under study, which confirms their importance in achieving economic growth in these countries. Moreover, the effect of economic growth and exports
on the FDI inflows is proved in Egypt and Tunisia, but such effect has not proved in the case of Morocco.
The results of the causal relationships in the long term illustrate the importance of economic growth and exports as determinants of FDI inflows in both Egypt and
Tunisia, while, the FDI inflows cause exports in Morocco. In addition, the hypothesis that exports lead economic growth has been verified in both Egypt and
Morocco, whereas the economic growth leads exports in Tunisia. Therefore, policies should focus on the real sector in Tunisia in order to increase the economic
growth rate, while in Egypt and Morocco, care must be taken to increase exports and fix the problems they face, and this in turn contributes to increase the rate of
economic growth.