FDI and economic growth in the GCC: Does the oil sector matter?

• Mohamed Elheddad ^[1] ; Mohga Bassim ^[2] ; Rizwan Ahmed ^[3]
  1. [1] University of Huddersfield

     University of Huddersfield

     Kirkburton, Reino Unido

     
  2. [2] University of Buckingham

     University of Buckingham

     Aylesbury Vale, Reino Unido

     
  3. [3] University of Birmingham

     University of Birmingham

     Reino Unido

     

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• Localización: Economics and Business Letters, ISSN-e 2254-4380, Vol. 10, Nº. Extra 3, 2021 (Ejemplar dedicado a: SOBC2020), págs. 178-190
• Idioma: inglés
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• Resumen

  • This paper investigates the impact of economic sectors’ foreign direct investment (FDI) on economic growth by validating the resource curse hypothesis in the Gulf Cooperation Council (GCC) countries. Applying OLS (Fixed and Random effects), Instrumental Variables (IV) and Limited Information Maximum Likelihood (LIML) estimations, empirical results indicate that resource-FDI inflows hinder economic growth in the GCC economies, while non-resource FDI has an insignificant effect on growth. Moreover, the total Greenfield FDI inflows deter economic growth in GCC economies. These results give evidence on the crowding-out effect of resource-FDI. This paper opens new insights for policymakers in designing a comprehensive policy on direct FDI inflows (resource and non-resource) to stimulate growth for attaining sustainable economic development for the longrun.