FDI and economic growth in the GCC: does the oil sector matter?


  • Mohamed Elheddad -Visiting Lecturer in Business studies, Scholars School Systems, Leeds Trinity University- UK -Visiting Lecturer in Economics, University of Buckingham- UK -Lecturer of Economics, Misurata University-Libya
  • Mohga Bassim University of Buckingham-UK
  • Rizwan Ahmed University of Birmingham https://orcid.org/0000-0002-1457-4115




This paper investigates the impact of sectoral foreign direct investment (FDI) on economic growth by validating the resource curse hypothesis in the Gulf Cooperation Council (GCC) countries. Applying OLS (Fixed and Random effects), Instrumental Variables (IV) and Limited Information Maximum Likelihood (LIML) estimations, empirical results indicate that resource-FDI inflows hinder economic growth in the GCC economies, while non-resource FDI has an insignificant effect on growth. Moreover, the total Greenfield FDI inflows deter economic growth in GCC economies. These results give evidence on the crowding-out effect of resource-FDI. This paper opens new insights for policymakers in designing a comprehensive policy on direct FDI inflows (resource and non-resource) for attaining sustainable economic development for the long run.




How to Cite

Elheddad, M., Bassim, M., & Ahmed, R. (2021). FDI and economic growth in the GCC: does the oil sector matter?. Economics and Business Letters, 10(3), 178–190. https://doi.org/10.17811/ebl.10.3.2021.178-190