DETERMINING FACTORS IN FOREIGN DIRECT INVESTMENT INFLOW INTO MIDDLE EASTERN ECONOMIES (International Affairs (6 / 2025 №112))

Abstract:

This article examines the application of an autoregressive distributed lag model (ARDL) to analyze the factors influencing foreign direct investment (FDI) inflow into Middle Eastern countries. Utilizing data on FDI, gross domestic product (GDP), population, life expectancy, merchandise trade, political stability, and control of corruption, the ARDL model explored both short-term and long-term relationships between these variables and FDI inflow. The simulation results indicate a significant impact of the examined factors' current and past values on the FDI inflow in the region. Specifically, it was found that increases in life expectancy rate, control of corruption index, population in the current year, and political stability indices from previous periods positively affect FDI inflow. In contrast, increases in the previous levels of GDP have a negative impact. A positive effect of past FDI inflows on their current levels was also detected, indicating a reinforcing feedback loop, where initial investments improve conditions or perceptions that attract further investments. The article contributes to understanding the dynamics of FDI in Middle Eastern countries, providing valuable data for policymakers and investors aiming to optimize conditions for attracting foreign capital.

Keywords: Autoregressive distributed lag model, Middle East, foreign direct investment.