The Implications of Foreign Direct Investment on Economic Development in Egypt

نوع المستند : المقالة الأصلية


1 Teaching Assistant of Economic Department, Faculty of Commerce, South Valley University

2 Professor of Economics and Foreign Trade, Faculty of Commerce and Business Administration, Helwan University


Over time, foreign direct investment has become the most influential and important for economic growth. Foreign direct investment affects economic growth for several reasons. Therefore, countries, whether developed or developing, pay special attention to foreign direct investment in an effort to achieve high growth rates. Foreign direct investment is one of the main determinants of economic growth in the host countries. There is no agreement between studies about the direction of the impact of foreign direct investment on economic growth. The problem is that both directions of the relationship have economic theories to back them up. In this research, we discussed the impact of foreign direct investment on economic development and economic growth in developing countries in general and in Egypt in particular. We also clarified the difference between economic growth and economic development. According to previous studies, foreign direct investment affects economic growth positively because it plays a major role in advancing economic development, but it has some negative effects in some special cases.
This research focused on the revealed comparative advantage and its relationship to foreign direct investment and economic growth in Egypt. From this, we found that foreign direct investment is not directed to sectors that have a comparative advantage, so its impact on growth is weak. The sectors that contribute significantly to economic growth are service sectors, so despite the occurrence of economic growth, we did not find economic development and this growth occurs in the short term.

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