Do foreign direct investments help to bolster economic growth? New insights from Asian and Middle East economies

Abstract

PurposeThe prime objective of this study is to offer fruitful implications about allocation and directing foreign direct investment (FDI) to gain maximum economic advantage. The study offers innovative findings by contributing to a new angle.Design/methodology/approachThe study used the annual data of 24 countries, for the period of 1995–2016 and employed quantile regression and GMM as main estimation techniques. For robustness of empirical findings and to check income effect, the study divided the countries as high income, low-income panels.FindingsOverall, the findings reported very interesting and surprising results as regional analysis. The results show the sensitivity of FDI for Middle East and high-income group of countries, inferring that there might several other factors due to which FDI is adversely affecting growth and these countries need to reform institutional quality.Research limitations/implicationsThe paper is restricted for 24 countries of Asia and Middle East, based on the data availability.Practical implicationsThe high-income countries should put more efforts to attract funds. The Asian and Middle East countries countries can update trade regulations to encourage entrepreneurs and reduce trade tariffs.Originality/valueThe present study investigated the role of FDI for economic growth in the context of Belt and Road Initiative countries of Middle East and Asian regions. The paper reviewed the past literature and identified regional analysis as a research gap to focus on Belt and Road Initiative in Asia and Middle East region.