les cahiers du mecas
Volume 22, Numéro 1, Pages 1-15
2026-06-02

Understanding Fdi Attractiveness In Algeria: An Empirical Analysis Using The Ardl Model



Authors : Bouyacoub Brahim .

Abstract

This paper examines the determinants of foreign direct investment (FDI) attractiveness in Algeria over the period 2000–2025, using an ARDL (AutoRegressive Distributed Lag) model that distinguishes between short- and long-term effects. The empirical findings reveal the existence of a cointegration relationship between FDI and its key determinants. In the long run, market size, trade openness, human capital, public investment, and the diversification of non-hydrocarbon exports exert a positive and statistically significant impact on FDI inflows. Conversely, macroeconomic instability—captured by inflation and exchange rate volatility—acts as a deterrent to the country’s attractiveness. The main contribution of this study lies in its dynamic analysis of FDI within the context of a rentier economy, highlighting the central role of structural factors in attracting foreign investment. These results suggest that enhancing Algeria’s attractiveness relies less on ad hoc incentives and more on structural reforms aimed at strengthening economic diversification, human capital, and macroeconomic stability.

Keywords

FDI attractiveness ; Algeria ; ARDL model ; Economic diversification ; Macroeconomic stability

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