Causal Dynamics between Foreign Direct Investment,  Economic Growth and Financial Development in Algeria during 1970–2017

SMART JOURNAL OF BUSINESS MANAGEMENT STUDIES	VOL. 17	NO. 1	PAPER 10
10.5958/2321-2012.2021.00010.5
CAUSAL DYNAMICS BETWEEN FOREIGN DIRECT INVESTMENT, ECONOMIC GROWTH AND FINANCIAL DEVELOPMENT IN ALGERIA DURING 1970–2017

Siham RIACHE, Bilal LOUAIL and Chahira BEGGACHE**
* Faculty of Economic, Commercial and Management Sciences, University of M'Hamed BOUGARA Boumerdes. Algeria ** Faculty of Economic, Commercial and Management Sciences, University of Algiers 03, Algiers. Algeria

This study looks at the connection between foreign direct investment, economic growth and financial development, in the Algerian economy, over the period of 1970–2019, within a multivariate framework. Empirical evidence, supported by the ARDL estimates, revealed that there was long-run equilibrium in the relationship, between the competing variables. Regarding the VECM results, bi-directional Granger causality existed between foreign direct investment and economic growth. The study could provide more accurate and comprehensive understanding of the dynamic association between foreign direct investment, economic growth and financial development, by helping policymakers to understand the character of dynamic relationships between foreign direct investment, economic growth and financial development.

KEYWORDS: Foreign Direct Investment, Growth Economic, Financial Development and Algeria Economy

JEL CLASSIFICATIONS: F23, F43 and F34