A Review of the Major Factors Influencing Foreign Direct Investment (FDI) in the Libyan Economy
Keywords:
Foreign Direct Investment, political stability, legal and regulatory environment, macroeconomic stability, natural resources.Abstract
Background
Foreign Direct Investment (FDI) plays a crucial role in promoting economic growth, technology transfer, employment creation, and integration into the global economy, particularly in developing and transition economies. Libya, despite possessing vast natural resources and a strategic geographical location, has historically attracted limited and volatile levels of FDI.
Methodology
The study adopted a review methodology for FDI and other data from various sources and a qualitative PRISMA review to identify and discuss the determinants of FDI inflows into Libya.
Findings
This qualitative PRISMA review examined the major factors influencing FDI inflows into the Libyan economy. It analyses economic, political, institutional, and structural determinants, with particular emphasis on political stability, legal and regulatory frameworks, macroeconomic conditions, infrastructure, and natural resource endowments. The study finds that while Libya has strong potential to attract foreign investment, persistent political instability, weak institutions, and regulatory uncertainty significantly hinder FDI inflows.
Recommendations
Identification of these determinants can aid policymakers in designing and implementing targeted reforms. Such policy, legal and regulatory reforms should aim at promoting a favourable business environment to strengthen investor confidence, and reduce investment risks for the promotion of increasing foreign investments in non-oil sectors sustainably. Actions on these aspects are recommended for the Libyan government.
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Copyright (c) 2026 Journal of Economics and Political Sciences
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