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Transport Economics and Management
Article . 2025 . Peer-reviewed
License: CC BY NC ND
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The effect of road and air transport infrastructure on FDI Inflows in MENA countries: A panel data analysis

Authors: Bensoltane BASSEM;

The effect of road and air transport infrastructure on FDI Inflows in MENA countries: A panel data analysis

Abstract

The relationship between transport infrastructure and Foreign Direct Investment (FDI) has been, and remains, a critical area of research. Accordingly, this study investigates their interplay in 15 MENA countries from 1996 to 2022, using panel data and Ordinary Least Squares (OLS) regression analysis. The results indicate that road transport infrastructure is the most influential factor in attracting FDI, with improvements significantly boosting foreign investment. Similarly, air transport infrastructure contributes positively by enhancing access to global markets, further driving FDI inflows. In contrast, human capital shows no statistically significant effect, while trade openness emerges as a crucial determinant, with liberalized trade policies fostering greater FDI. Exchange rate demonstrates a marginally positive effect, reducing investor uncertainty, whereas market size, measured by GDP per capita, strongly attracts FDI due to larger growth potential and higher purchasing power. Additionally, political stability fosters investor confidence, further supporting FDI inflows. Finally, the interaction effects reveal that road transport infrastructure amplifies the positive impacts of both trade openness and exchange rate on FDI. Building on these findings, the study provides actionable policy recommendations to enhance FDI inflows in the MENA region and highlights promising avenues for future research.

Keywords

Transportation engineering, TA1001-1280, JEL Classification, Road Transport Infrastructure, Foreign Direct Investment (FDI), Air Transport Infrastructure, Transportation and communications, Panel Data Analysis, MENA countries, HE1-9990

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
2
Average
Average
Average
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