Examining the Relationship between FDI, Economic Growth, Energy consumption and Exports in Yemen

Abstract

The aim of this paper is to examine the cointegration among FDI, economic growth, energy consumption and exports in Yemen for the 1990-2014 period. The ARDL bounding the maximum likelihood and also identify the long-run and short-run relationship between the research variables. It is important to highlight these relationships in less developing countries due to low FDI inflows. Overall, the main findings show there is cointegration among FDI and GDP, energy consumption, exports. In the long and short run the results depict there is negative relationship between FDI, GDP and exports. But in long and short run there is positive relationship between FDI and energy consumption. This shows the importance of FDI to Yemen economy in order to enhance economic growth. The country needs various policies to attract FDI in Yemen. Furthermore, it is also very important to focus on exports to support FDI inflows in coming years in Yemen.

Key words: FDI, economic growth, energy consumption and exports, Yemen.