Author(s): Chemma Nawal, Djelti Larbi
This study aims to analyze and diagnose the effect of foreign trade liberalization on the foreign direct investment (FDI) inflows for Algeria during the period between (1994-2019), autoregressive distributed lag model (ARDL) was applied. The results of this study indicate that on short run there is a negative impact of trade openness on FDI inflows for Algeria, owing to instability of investment environment in terms of the sudden changes in investment laws in Algeria, but on long run there is a positive relationship between trade openness and FDI inflows, because of the prominent contributor of Algeria’s exports value is hydrocarbon sector (HS), where multinational corporations (MNC) possess at least 49% of HS share. Although this positive relationship but the trade openness was in favor of imports at the cost of FDI inflows, and that it seemed clear through the weakness of FDI inflows value for Algeria, and the continuous growing of Algeria’s imports value.