The urbanization-economic growth nexus in Egypt: the mediation role of FDI

نوع المستند : المقالة الأصلية

المؤلف

Department of Economics, Faculty of Commerce, Mansoura University, Mansoura, Egypt

10.21608/psej.2025.358675.1178

المستخلص

As global migration from rural to urban areas increases, bringing diverse effects on human well-being, urbanization has become a key focus in global development policies and initiatives. This study examines the relationship between economic growth and urbanization in Egypt, concentrating on the role of foreign direct investment (FDI) as a mediator factor. using annual data from 1980 to 2023. The analysis applies the ARDL model to assess both short- and long-term relationships, with robustness checks conducted using FMOLS and CCR methods. Although urbanization and foreign direct investment (FDI) individually showed a positive impact on economic growth, their interaction (URBFDI) had a negative effect. These findings suggest that rapid urbanization without sufficient planning may reduce the effectiveness of foreign investments in supporting economic growth. According to these results Policymakers should manage urban growth and foreign investment to benefit the economy by improving infrastructure and preventing overcrowding. Also, foreign investments should be directed toward high-value-added productive sectors, such as advanced manufacturing and technology.

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