Studying the Effect of Foreign Direct Investment on Economic Growth in Greater and Traditional Middle East Countries

This article tries to study whether foreign investment in the Greater and Traditional Middle East leads to economic growth. We have selected 21 countries of this zone for the time period 1980-2008. Due to lack of endogenous relationship between variables, the two equations have been estimated separately. FDI affects economic growth directly and indirectly. Indirect effect means interaction term. Infrastructures and economic stability have a special significance in foreign investment attraction. Furthermore, oil extraction has a positive effect on foreign investment attraction and economic growth while technology gap has a negative effect on FDI and GDP variables.