A Review on the Effects of Globalization and Terrorism on the Economic Development of Selected Member Countries (MENA)

Abstract

Abstract. Nowadays one of the topics under discussion, is the phenomenon of globalization. Globalization, is the fusion and integration of national economies into the global economy. Its effects can be observed in increased international trade, globalization of production and the flow of foreign direct investment. Studying the wide effects of this process on different aspects of human life such as political, economic, social and cultural effects has drawn the attention of scholars, politicians, economists and the world's cultural custodians. These studies, first of all need to quantify this phenomenon and construct and use appropriate indexes for its measurement. The aim of the present research is to study the effect of globalization on attraction of foreign direct investment in selected member countries of MENA. Another aim of this research is to study the effects of shocks made by gross domestic product variables, trade liberalization degree and the level of terrorist events on attraction of foreign direct investment in these countries. The model of the research was estimated using panel econometric modeling techniques such as panel unit root, panel co-integration and generalized method of moment (GMM) estimator. The results of the study suggest that there’s a positive and significant relationship between globalization and foreign direct investment. Also the market size index, and human capital index have a positive and significant effect and the population index has a negative effect on the attraction of foreign direct investment. The results of this study suggests that terrorism shocks have a negative effect on attraction of foreign direct investment. In contrast, shocks made by gross domestic product, and trade liberalization, have a positive effect on the attraction of foreign direct investment.