Does the Source of Capital Matter? A Comparative Analysis of Foreign and Domestic Investment in Egypt’s Sustainable Development

Document Type : Original Article

Authors

1 Department of economics, faculty of politics and economics, suez university

2 Eastern Illinois University

Abstract

This paper investigates the role of FDI and domestic investment in Egypt's economic development between 1990 and 2022, focusing on their respective roles in sustainable growth and human development. Using an ARDL model, the study will explore the long- and short-run relationships between sustainable development (as proxied by HDI) and FDI inflows, domestic investment, and other macroeconomic variables. These results indicate that FDI and domestic investment are important factors in long-run economic growth, though they differ in effectiveness. While FDI has been critical in boosting technological innovation and enhancing infrastructure, domestic investment has shown a more direct and stable impact on employment and local industry development. The paper concludes with some policy recommendations that could be considered to improve the investment climate and ensure economic resilience in the long term. Such as, supportive policies for domestic investment are required. That is, creating an investment-friendly environment domestically, which would involve the pursuit of appropriate macroeconomic stability and access to finance that is easy for domestic firms.

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