THE IMPACT OF FDI ON ECONOMIC GROWTH: EVIDENCE FROM TUNISIA

Abstract

This paper examines the impact of foreign direct investment on economic growth in Tunisia using times series data for the period 1980-2015. In this study, we used the ARDL (Autoregressive Lag Distribution) approach to study the short-run and long-run relationship between Foreign Direct Investment and economic growth. The empirical results show that FDI has positive impact on economic growth in both the short and the long run. For the other determinants of economic growth, we have shown that domestic investment and human capital have had a positive and significant effect on the economic growth in Tunisian economy in the short run rather than in the long run. On the other hand, the degree of trade openness has a negative effect on economic growth in short-run and long-run.