A Vecm Analysis on the Determinants of FDI Inflows: The Case of Yemen

Abstract

This study investigates the impact of foreign direct investment on economic growth in Yemen during the period 1990 to 2015. This study revealed that foreign direct investment positively affects the real GDP in the long term and short term. While the exchange rate, fixed capital formation, and trade openness negatively affect long-term and short-term economic growth, inflation adversely affects the economic growth in the long term but positively affects the short term. Conclusions and policy recommendations were made using these results.