Impact of Monetary Discipline and Growth Rate on Foreign Direct Investment in the Egyptian Economy

This paper aims to examine the impact of monetary discipline and growth rate variables on foreign direct investment (FDI) in the Egyptian economy from 2005 to 2023. The study examines the relationship between monetary discipline, growth rate, and FDI in Egypt, verifying the stationarity of these time series. The aim is to develop estimates that enable the accurate prediction of FDI in Egypt. The results indicate that the exchange rate and growth rate have a significant positive impact on FDI inflows. In contrast, the interest rate has a limited impact, and the money supply has the opposite effect. Monetary policy, through monetary discipline in the Egyptian economy, has a positive impact on FDI in Egypt according to long-term criteria. The results of this model highlight the importance of implementing disciplined and stable monetary policies that foster a favorable investment environment by stimulating and encouraging productive sectors, thereby achieving macroeconomic stability and promoting FDI growth. The study addresses key gaps in literature by simultaneously assessing the effects of FDI, which have often been analyzed separately in previous research. This comprehensive perspective offers a deeper understanding of how various risk factors influence different types of investment flows to Egypt. The relationship between fiscal discipline, economic growth, and foreign direct investment (FDI) provides insights for both academics and policymakers in Egypt to enhance the investment environment. Ultimately, investors will have an increased incentive to invest in the country, which will positively impact FDI rates.