The Role of Foreign Direct Investment in Economic Growth, Relying on the Theory of Dependence and Governance in selected countries

FDI to finance economic projects is one of the most important concerns of economic decision makers in society. Some of the fundamental factors that have played a less prominent role in the relationship between economic growth and foreign direct investment include how countries are governed and how much they depend on developed countries.Therefore, the main purpose of this study is to investigate the role of FDI on economic growth based on the theory of dependency and governance in developing countries over the period 1990-1990, using systematic generalized momentum approach. To achieve this overall goal, three models are estimated: the first model of factors affecting economic growth, the second model of factors affecting the exchange rate and the third model is factors affecting FDI.The results of the first model estimation showed that foreign direct investment has no significant effect on economic growth of developing countries. On the other hand, results showed that governance index and dependency index had positive effect on economic growth. Interaction results also showed that governance and interdependence reinforce each other's effect on economic growth. The results of the estimation of the third model showed that economic growth and governance index have a positive effect on FDI