Page 20 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.81, # 1, 2024, pp. 4-21

Figure 5: CUSUM of Squares Test Results
1.6

1.2

0.8

0.4

0.0

-0.4
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

CUSUM of Squares 5% Significance
Source: Compiled by the researcher depending on: outputs of EViews 12.

CONCLUSIONS
Through the econometric study, the impact of FDI on economic development in
Algeria during the period 1990-2022 was identified, with the following results:

- Tracking the evolution of FDI flows to Algeria, it is noted that the direction of
flows has undergone various changes. They decreased due to the economic and
political disturbances experienced by the country and increased due to the reform
programs implemented by the state.

- There is a statistically significant positive effect of FDI on the GDP in the long
term;

- There is a statistically significant positive effect of FDI on the GDP in the short
term;

- The error correction coefficient indicates the presence of a long-term equilibrium
link between FDI and the economic development rate, with 28% of the
imbalances corrected each year. In other words, all imbalances are corrected
within three years and six months;

- FDI also has a positive effect in both the short and long term on the GDP in
Algeria.

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