Attractiveness of foreign direct investment and structural transformation of territories: Comparative study between north African countries and the world's emerging countries

Abstract

This article examines how emerging countries around the world have managed to develop despite economic and financial crises, while developing countries, notably in North Africa, have been unable to sustain their growth despite significant endowments of production factors. This article posits that successful structural transformation (ST) is indispensable for them. It would constitute the necessary condition for their development if it emphasizes the allure of Foreign Direct Investment (FDI) to complement such absorptive capacities. The primary objective of this article is to analyze the impact of FDI on ST in North African countries compared to emerging countries worldwide. The analysis, grounded in theoretical literature and employing a panel econometric approach with data analysis, seeks to comprehend the role of FDI in the disparities between emerging and developing countries. It scrutinizes not only their impact on growth but also on crucial channels of ST such as innovation, urbanization, institutional quality, and labor migration. The results from the estimated econometric models reveal a negative impact of FDI on ST in North Africa, unlike in emerging countries. In conclusion, the article suggests redirecting FDI towards growth sectors and drivers of change such as innovation, urbanization, and institutional quality to foster ST in developing countries.