The Impact of Foreign Direct Investment on Economic Growth in Palestine

Abstract

Foreign Direct Investment (FDI) is usually considered an important factor for economic growth in developing countries. FDI plays an important role in transferring technology from developed to developing economies. It also stimulates domestic investments and enhances human as well as physical capital in the host countries. This study aimed at identifying the effect of FDI and some other variables on the Palestinian economy.  In the light of data analysis, time series data for FDI inflows, gross capital formation (GCF) and labor force (LF) were gathered for Palestine over the period 2005-2019.The study found that  an increase in foreign direct investment by 1% leads to an increase in GDP by 0.149%, and this satisfies the assumption that increasing foreign direct investment leads to a high rate of economic growth in Palestine.

Keywords:foreign direct investments, economic growth, developing countries,  gross domestic product, the Palestinian economy.

DOI: 10.7176/JESD/13-22-06

Publication date: November 30^th 2022