Foreign Capital Inflows, Institutional Factors and Economic Growth. Evidences from Republic of Yemen
Foreign Capital Inflows, Institutional Factors and Economic Growth. Evidences from Republic of Yemen

Summary/Abstract: The present study attempts to explore the effect of foreign capital inflows (i.e., Foreign Direct Investment (FDI), workers’ remittances and foreign aid), on economic growth for Republic of Yemen. We also examine the role of corruption and political stability whether these factors have any impact on foreign capital inflows between 2003 and 2014. The empirical results reveal that FDI inflows have a positive and significant effect, while workers’ remittances have insignificant impact on Yemen’s economic growth. However, results on the impact of corruption and political stability on economic growth are statistically insignificant. The findings of the study suggest some policy implication, i.e. FDI and remittances need to be enhanced, while corruption needs to be controlled and political stability be sustained in order to achieve sustainable economic growth and development.

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