الأفاق للدراسات الإقتصادية
Volume 10, Numéro 1, Pages 140-156
2025-10-01
The Crowding Out Effect In Algeria: A Study Of Foreign And Domestic Investment With Emphasis On Governance And Private Sector Dynamics
Authors : Daoudi Mohammed .
Abstract
This study examines the relationship between domestic private investment (PCF) and foreign direct investment (FDI) in Algeria, focusing on governance and public investment. The findings reveal a dual impact of domestic investment on FDI: a short-term crowding-out effect due to resource competition, but a long-term complementary role in improving the business environment. Governance factors, such as control of corruption (CC) and rule of law (RL), positively influence FDI in the short term, though lagged effects highlight reform challenges. Public investment (GCF) has limited short-term influence but later supports FDI through infrastructure development. The study emphasizes the need for integrated policies to enhance cooperation between investments, improve public investment efficiency, and sustain governance reforms to strengthen Algeria’s investment climate.
Keywords
Foreign Direct Investment ; Domestic Private Investment ; Crowding-Out Effect ; Governance ; Public Investment
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