Dynamic Relationship between Foreign Direct Investment & Economic Growth in Iraq: Evidence from ARDL Bound Testing Approach

The connection between economic development and FDI has been very popular among economists and academia. The importance of this relationship is more significant in developing countries particularly with high unemployment rate and low technological advancement. This investigation is an effort to highlight the issue in Iraqi context by applying ARDL bound test estimation approach. For this purpose, yearly time series data over the period of 1971 to 2016 has been utilized to apply ARDL long run estimation. The results provide robust evidence supporting the view that Iraqi GDP is affected by foreign direct investment in long run. Further, bound test affirm the non presence of short-run causality relationship from foreign direct investment to GDP.