The Investment Environment and its Role in Attracting and Stimulating investment in Libya

Abstract

This Study aims to know the most important determinants of local private investment and foreign direct investment in Libya during the period (1980 – 2010) using ARDL and Bound test approach. The study concluded that there is a con – integration relationship between the defendant and independent variables in the two models used in the study. The results found that there is positive relationship between the government spending and local private investment, which is means the complementarity of the relationship, and the existence of an inverse relationship between the rate of inflation and domestic private investment and this is what is spent with economic theory. As for foreign direct investment, the results showed a positive relationship with the gross domestic product, as well as the existence of a positive relationship with the degree of economic openness. And the error correction factor in each of the two models was significant and its sign was negative.

Key words:  Investment environment – Local investment – foreign direct investment.