Recent exports matter: export discoveries, FDI and Growth, an empirical assessment for MENA countries

Export diversification has become a priority goal for the development strategies of the MENA countries. In this paper, we aim at measuring the effects of exports’ diversification on growth in MENA countries. But we also try to assess the way new exports and FDI interact each others in the process of growth. Within the framework of an endogenous growth model, we claim that FDI can act as a complementary factor in the discovery process. The model is estimated by the system-GMM and we provide robust evidence that FDI do not necessarily have the same effect on growth according to the diversification level. We also show that while FDI have a positive and significant effect on the MENA countries’ growth, it is most probably rather linked to the direct effect on value added and employment than to the spillover effects of technological transfer.