Foreign Direct Investment And Domestic Investments In Algeria: Crowding-in Or Crowding-out Effects?

Résumé: Studies on the relationship between FDI and domestic investment find contradictory results, thus, the objective of this study is to explore whether Foreign Direct Investment (FDI) crowds-in or crowds-out domestic investment in Algeria by using ARDL cointegration technique from the period of 1990-2020. Empirical evidence shows that an inflow of FDI crowds-in domestic investment “DI” in Algeria. Moreover, the marginal effect of economic growth on the domestic investment is significant. In a more precise way, if growth grows by 1%, domestic investment improves by 1.23%. Furthermore, the coefficient of gross national saving is positive and significant, indicating that a 1% increase in savings leads to a 0.17% increase in domestic investment, meaning that domestic investment is financed by domestic resources. This causality is coherent with the neoclassical hypothesis that saving is the prerequisite to investing.

Publié dans la revue: مجاميع المعرفة