Page 4 - Azerbaijan State University of Economics

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

THE IMPACT OF FOREIGN DIRECT INVESTMENT (FDI)
ON ECONOMIC DEVELOPMENT: THE CASE OF
ALGERIA

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Aboubaker Khoualed *, Taher Makhloufi , Ahmed Makhloufi , Elyas Luqman 4
1
2
1 Department of economic sciences, Badji Mokhtar University – Annaba, Algeria,
Email: [email protected] (Corresponding author)
2,3,4 Department of finance and accounting, Amar Telidji University – Laghouat,
Algeria, [email protected], [email protected],
[email protected]
1 https://orcid.org/0009-0004-0042-0184; https://orcid.org/0000-0002-9185-6036;
2
3 https://orcid.org/0009-0006-6738-3407; https://orcid.org/0009-0004-5759-9437
4

https://doi.org/jestp.2024.81.01.01

Received: January 05; accepted May 16, 2024; published online July 26, 2024

ABSTRACT
The study aimed to determine the impact of foreign direct investment (FDI) on
economic development in Algeria in the short and long term by analyzing the
incoming flows during the study period and demonstrating this effect by using the
FARDL model. The study found that FDI positively affects the Gross domestic
product (GDP) in the long term, meaning it contributes to increasing economic
development, as well as in the short term, where FDI had a positive impact on the
GDP, thereby contributing to the increase in economic development in Algeria.

Keywords: Foreign Direct Investment, Economic Development, Gross Domestic
Product, FARDL Model, Long-term and Short-term Effects.

JEL Classification: E2, E21, O16

INTRODUCTION
FDI is one of the most important sources of external financing that countries rely on
to accelerate the development process due to its potential impact on the economy of
the host country.

This impact includes effects on production, employment, income, prices, exports, and
imports, which in turn affects the economic development of the host country and
achieves welfare in the host country.

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