Foreign Direct Investment in North Africa

Abstract

North Africa is considered to be one of the wealthiest areas of the continent thanks to its natural resources and strategic geopolitical location. While the region is generating about one-third of Africa's total GDP, its economic indicators are not presenting a bright picture for North African countries. This chapter attempts to provide an in-depth overview of the investment environment and shed light on the main constraints on foreign direct investment (FDI) in each of the North African countries. The authors focus on contemporary trends in FDI and policies regarding human capital promotion and infrastructure development. The descriptive analysis indicates that the volume of FDI in the North Africa region is still weak compared to international flows to other developing regions. This outcome can be associated, in addition to unattractive FDI policies, with the absence of real economic and financial reforms, persistent political instability, lack of technological readiness, inadequate regulatory and institutional framework, high corruption and inefficient bureaucracy.