Drivers of Foreign Direct Investment in Egypt

Abstract

This article set out to analyse the occurrence of foreign direct investment (FDI) in the North African country of Egypt. Various macroeconomic variables were examined to determine their effect on attracting FDI inflows towards Egypt. Using OLS, we sought to identify key determinants of FDI in Egypt. Despite natural resource endowment in gas, oil and alternative energy – there was no evidence that foreign investors were flocking to Egypt for the natural resources. On the other hand, it was established that financial market development plays a pivotal role in harnessing inward FDI. It is recommended that the Egyptian government removes barriers to trade, strengthens institutions, and continues the momentum of providing an investor-friendly environment for foreign investors so as to improve its attractiveness and increase its potential to harness more FDI to push its economic growth agenda as a developing African country