The effect of natural resources and foreign direct investment on economic growth


Natural Resources
Foreign Direct Investment
Economic Growth
ARDL Model
Algeria Economy

How to Cite

Mahfoudi, F., Riache, S., & Louail, B. (2024). The effect of natural resources and foreign direct investment on economic growth. Economics and Environment, 88(1), 731.


The proposed research aims to examine The Impact of Natural Resources and Foreign Direct Investment on Economic Growth in Algeria during the period 1970-2021 and compare it with the Saudi economy, which is considered the closest economy in terms of natural resources. Analyse the factors influencing economic diversification and innovation. The research seeks to understand the impact of natural resources, including oil and gas, on the Algerian economy and study the factors influencing sustainable development and economic diversification. This research employs the Autoregressive Distributed Lag (ARDL) approach. The findings suggest that, in total, there is The Impact of Natural Resources and Foreign Direct Investment on Economic Growth in Algeria during the period 1970-2021. The positive correlation between resources and economic growth highlights resource extraction's role in Algeria's economic development. It underscores the need for diversification to reduce dependence on commodity markets. The research focuses solely on economic factors, neglecting social and political dynamics. Limited data availability may constrain the depth of analysis, potentially overlooking nuances in the relationship between natural resources, FDI, and economic growth. The findings offer insights for Algerian policymakers to develop strategies for sustainable economic growth, emphasising the need for diversification beyond natural resources. Recommendations may inform policy decisions aimed at fostering innovation, reducing dependency on volatile resource sectors, and promoting environmental sustainability.


Al-Mawali, N. (2015). Do natural resources of rentier states promote military expenditures? Evidence from GCC Countries. Journal of Economic & Financial Studies, 3(03), 49-53.‏

Amer, E. A. A. A., Meyad, E. M. A., Gao, Y., Niu, X., Chen, N., Xu, H., & Zhang, D. (2022). Exploring the link between natural resources, urbanization, human capital, and ecological footprint: A case of GCC countries. Ecological Indicators, 144, 109556.‏

Apergis, N., & Ben Ali, M. S. (2020). Corruption, Rentier States, and Economic Growth: Where Do the GCC Countries Stand? In H. Miniaoui (Ed.), Economic Development in the Gulf Cooperation Council Countries (pp. 111-123). Singapore: Springer. ‏

Belloumi, M., & Alshehry, A. (2018). The impacts of domestic and foreign direct investments on economic growth in Saudi Arabia. Economies, 6(1), 18.

Ben-Salha, O., & Zmami, M. (2021). The effect of economic growth on employment in GCC countries. Scientific Annals of Economics and Business, 68(1), 25-41.‏ DOI:

Brown, S. F., Lashine, A. K., & Hyde, A. F. L. (1975). Repeated load triaxial testing of a silty clay. Geotechnique, 25(1), 95-114.

Ghatak, S., & Siddiki, J. U. (2001). The use of the ARDL approach in estimating virtual exchange rates in India. Journal of Applied statistics, 28(5), 573-583.

Hayat, A., & Tahir, M. (2021). Foreign direct investment, natural resources and economic growth: a threshold model approach. Journal of Economic Studies, 48(5), 929-944.

Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration—with appucations to the demand for money. Oxford Bulletin of Economics and statistics, 52(2), 169-210.

Kayıkçı, F., & Bildirici, M. (2015). Economic growth and electricity consumption in GCC and MENA countries. South African Journal of Economics, 83(2), 303-316.‏

Louail, B. (2019). Determinants of foreign direct investment in Arab countries during 1970–2016. International Journal of Advanced and Applied Sciences, 6(3), 102-110.

Louail, B., & Zouita, M. S. (2021). The relationship between foreign direct investment, financial development and growth economic in Next-11 Countries: a PMG/ARDL estimation. Management, 25(1), 28-50.

Mahfoudi, F., & Louail, B. (2023). Determinants of Foreign Direct Investment in Algerian Country during the Period & 1990-2017. Zagreb International Review of Economics and Business, 26(1), 185-196.

Muhammad, B., & Khan, M. K. (2023). Do institutional quality and natural resources affect the outward foreign direct investment of G7 countries? Journal of the Knowledge Economy, 14(1), 116-137.

Muhammad, B., Khan, M. K., Khan, M. I., & Khan, S. (2021). Impact of foreign direct investment, natural resources, renewable energy consumption, and economic growth on environmental degradation: evidence from BRICS, developing, developed and global countries. Environmental Science and Pollution Research, 28, 21789-21798.

Munawwar, S., & Ghedira, H. (2014). A review of renewable energy and solar industry growth in the GCC region. Energy Procedia, 57, 3191-3202.‏

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326.

Roy, A. (2024). The impact of foreign direct investment, renewable and non-renewable energy consumption, and natural resources on ecological footprint: an Indian perspective. International Journal of Energy Sector Management, 18(1), 141-161.

Saqib, N., Duran, I., & Hashmi, N. I. (2022). Impact of financial deepening, energy consumption and total natural resource rent on CO2 emission in the GCC countries: evidence from advanced panel data simulation. International Journal of Energy Economics and Policy, 12(2), 400-409.‏

Shinwari, R., Zakeria, I., Usman, M., & Sadiq, M. (2023). Revisiting the Relationship Between FDI, Natural Resources, and Economic Growth in Afghanistan: Does Political (in) Stability Matter? Journal of the Knowledge Economy, 1-30.

Wang, J., Yang, J., & Yang, L. (2023). Do natural resources play a role in economic development? Role of institutional quality, trade openness, and FDI. Resources Policy, 81, 103294.

World Bank. (2022). World Development Indicators Data Bank.

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Copyright (c) 2024 Economics and Environment


Download data is not yet available.