Impact of Foreign Direct Investment on Economic Growth in Palestine: An Econometric Study of The Period (1994-2013)

Abstract

The main Objective of the study is to find out the impact of Foreign Direct Investment (FDI) on Economic Growth in Palestine during the period of 1994 -2013, the study also attempts to assess the effects of domestic working labour force(WL),  gross domestic capital formation (GDCF), and foreign trade (FTR) on economic growth.To examine the empirical relationship between (FDI) and economic growth the study adopted a standarized Cobb- Douglas production function by using the annual official data of the Palestinian Central Bureau of Statistics  (PCBS), and applying the Ordinary least Square method (OLS) . The empirical results of the model applied indicated that there is a positive relationship between the (FDI) and economic growth in which the elasticity of (FDI) is 0.66%,and the other elasticities of the study model is 2.04% for (WL), 1.23% for (GDCF) and 0.13% for (FTR) .R² = 94% , F = 58.93 and DW = 1.19. The study suggested several recommendations that can boost the level of  economic growth in Palestine.

Kew words: Economic Growth, Foreign Direct Investment (FDI), Domestic Working Labour Force (WL) Gross Domestic Capital Formation (GDCF), Foreign Trade (FTR).