The Interrelationship Between Foreign Direct Investments And Inflation Rates In Syria.

Abstract

In the second half of  the 20th century, the world witnessed an increasing trend towards foreign direct investment as an effective development tool. Especially after the emergence of modern development theories based on the idea that the development deficit in developing countries is not due to the lack of development requirements of material economic resources, but due to the inability of these countries to capitalize resources and exploit them  in such a way that makes them an engine of growth and motivation towards achieving Comprehensive economic development This type of investment is one of the most important economic pillars in contemporary reality, as it plays an important role in the process of economic and social development in countries, because ,advanced technology managerial skills flow through it as a major channel.

FDI has played a major role in supporting the growth of the economies of developing countries since the 1980s, taking advantage of the rapid spread of ICTs , the trend towards a market economy in most developing countries and trade liberalization. In terms of capital formation, jobs generation and export expansion, or in terms of access to modern technology needed for economic development.

FDI inflows into Syria have been increasing since 2003 as a result of the Syrian government's new approach to openness to the domestic and foreign private sector and adaptation of  a market economy.

This research will  attempt to know the mutual relationship between the net flows of this type of investments and the inflation rates prevailing in the Syrian economy during the period (1990-2010),where ,in the short term, a weak causal relation was proofed from inflation rates toward net FDI flows, while there was no causal relation in the opposite direction. As for in the long run, the causal relation from inflation toward net FDI flows will fade, while in the opposite direction there will be no relation. The recommendations of the research focused on financing the reconstruction of the devastation caused of the war on Syria, by relying on foreign direct investment as an external source of financing.