Revisiting the Non-Oil Export–Fdi Nexus: Panel Evidence From Arab Oil-Exporting Economies
Revisiting the Non-Oil Export–Fdi Nexus: Panel Evidence From Arab Oil-Exporting Economies

Summary/Abstract: This study investigates the relationship between non-oil export development and foreign direct investment (FDI) inflows in oil-exporting Arab economies over the period 2005–2023 using panel data techniques. Non-oil exports (NOE) are measured as the value of non-hydrocarbon exports in current U.S. dollars, while FDI inflows are captured by net FDI inflows according to the balance of payments. The empirical analysis, based on a random-effects specification, reveals a positive and statistically significantassociation between export diversification and FDI inflows. The findings indicate that the expansion of non-oil exports strengthens investment attractiveness by enhancing productive capacity, improving macroeconomic resilience, and reducing dependence on hydrocarbon revenues. The magnitude of this effect, however, differs across countries and is conditioned by institutional quality, infrastructure development, and trade openness. Economies characterized by stronger governance frameworks and advanced logistical systems exhibit a more pronounced export–FDI linkage. The results support the view that structural diversification and institutional reform constitute essential components of sustainable investment strategies in oil-dependent Arab economies.

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