The Role of Foreign Direct Investment under Algeria's Investment Law 22/18 in Promoting Foreign Trade: The Case of Algeria

Povzetek

Algeria's ongoing economic transformation demands enhanced integration into global value chains and diversification beyond hydrocarbon dependence. Investment Law 22/18, enacted in July 2022, introduced sweeping reforms to investor protections, incentive structures, and dispute resolution mechanisms aimed at attracting foreign direct investment into non-oil sectors. This article examines the theoretical and empirical linkages between foreign direct investment and trade performance, synthesizing evidence from peer-reviewed scholarship to assess how legal guarantees and fiscal incentives embedded in Law 22/18 may promote export capacity, upgrade domestic supplier networks, and facilitate technology transfer. Drawing on autoregressive distributed lag models and cointegration analyses conducted for Algeria and comparable emerging economies, the review identifies positive long-run associations between foreign direct investment inflows and export growth, alongside bidirectional causality between these variables. The conceptual framework encompasses horizontal, vertical, and export-platform investment motives, spillover channels through backward and forward linkages, and the import intensity of foreign-funded operations. While Law 22/18 establishes favorable guarantees including capital repatriation rights, protection against administrative requisition, and sectoral incentives for priority industries, the realized trade-promotion effects depend critically on absorptive capacity, regulatory stability, and complementary infrastructure. The article underscores that foreign direct investment can serve as a catalyst for export diversification and supplier capability development when host-country conditions facilitate technology diffusion and competitive upgrading.