Reconceptualizing the legal and institutional determinants of foreign investment attraction in Algeria: Stability, protection mechanisms, and incentive-based policy frameworks

Salaheddine Chergui

doi:10.15637/jlecon.3211

Authors

Salaheddine Chergui University of Batna 1 / Algeria 0009-0001-2879-600X

10.15637/jlecon.3211

Abstract

Purpose: This study examines the legal and institutional determinants of foreign investment attraction in Algeria, focusing on legislative stability, protection of investor property rights, and incentive-based policy mechanisms. It aims to assess the extent to which Algeria’s investment framework provides legal certainty and creates a favorable environment for foreign investors. Method: The study adopts a qualitative research design based on doctrinal legal analysis, policy evaluation, and document analysis. It draws on Algerian investment legislation, constitutional provisions, regulatory texts, academic literature, and reports issued by international organizations to evaluate the legal, institutional, and fiscal dimensions of the Algerian investment framework. Findings: The findings indicate that Algeria has developed a relatively comprehensive legal framework aimed at strengthening investor confidence through stabilization clauses, safeguards against expropriation, and tax and financial incentives. However, frequent legislative amendments, administrative complexity, and implementation challenges may weaken the practical effectiveness of these guarantees. Conclusion/Contribution: The study concludes that sustainable foreign investment attraction requires not only formal legal protections but also institutional credibility, regulatory consistency, and transparent enforcement. By integrating legal, institutional, and fiscal dimensions within a unified analytical framework, this research contributes to the literature on investment governance in developing economies and provides a context-specific assessment of Algeria’s investment policy model.

Keywords:

Foreign Direct Investment (FDI) Investment Climate Legislative Stability Investor Protection Tax Incentives Investment Policy Algeria

Downloads

Download data is not yet available.

References

Abdel Karim Salama, A. (1987). Conditions for legislative stability in international investment and trade contracts. Egyptian Journal of International Law, 43, 66–85.

Al-Far, A. W. M. (n.d.). Legal principles of foreign investment protection.

Al-Samrai, D. M. (2006). Foreign investment: Obstacles and legal guarantees. Center for Arab Unity Studies.

Asiedu, E. (2006). Foreign direct investment in Africa: The role of natural resources, market size, government policy, institutions and political instability. World Economy, 29(1), 63–77.

Aziz, G. D. (2006). The effectiveness of tax incentives in income tax law No. 91 of 2005 to encourage investment. Ministry of Finance, Egypt.

Bowen, G. A. (2009). Document analysis as a qualitative research method. Qualitative Research Journal, 9(2), 27–40. https://doi.org/10.3316/QRJ0902027

Creswell, J. W., & Poth, C. N. (2018). Qualitative inquiry and research design: Choosing among five approaches (4th ed.). SAGE Publications.

Dunning, J. H. (2001). The eclectic (OLI) paradigm of international production: Past, present and future. International Journal of the Economics of Business, 8(2), 173–190.

Elahcene, M. (2025). Foreign direct investment in Algeria: Between reality and challenges. Science, Education and Innovations in the Context of Modern Problems, 8(2), 463–478.

Fella, H., & Mariam, H. (n.d.). Foreign direct investment in Algeria: Between legal incentives and obstacles. Al-Mufakir Magazine, (10), 366–380.

Globerman, S., & Shapiro, D. (2003). Governance infrastructure and US foreign direct investment. Journal of International Business Studies, 34(1), 19–39.

Habib, M., & Zurawicki, L. (2002). Corruption and foreign direct investment. Journal of International Business Studies, 33(2), 291–307.

Hanafi, H. M. (1991). Tax exemptions and their role in development. In Proceedings of the First Tax Conference. Egyptian Tax Association.

Hashim, R. A., et al. (2009). Incentives and guarantees for investors under Iraqi investment law and some Arab investment laws. Journal of Economic Sciences, 6(23), 73–90.

Hutchinson, T., & Duncan, N. (2012). Defining and describing what we do: Doctrinal legal research. Deakin Law Review, 17(1), 83–119.

Jensen, N. M. (2008). Political risk, democratic institutions, and foreign direct investment. Journal of Politics, 70(4), 1040–1052.

Kinda, T. (2010). Investment climate and FDI in developing countries: Firm-level evidence. World Development, 38(4), 498–513.

Lamari, W. (2011). Incentives and legal barriers to foreign investment in Algeria (Master’s thesis, University of Algiers 1).

Mahani, M. N. T. (2010). The impact of incentives in income tax law on tax revenues in the Gaza Strip (Master’s thesis, Islamic University of Gaza).

Morsli, D., & Boukabous, M. (2026). Investing in green loans as a mechanism for financing environmentally friendly investment projects: Analytical study (2020–2025). Science, Education and Innovations in the Context of Modern Problems, 9(1), 914–928. https://doi.org/10.56334/sei/9.1.84

North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge University Press.

Nouara, H. (2013). Legal protection of foreign investor property in Algeria (Doctoral dissertation, Mouloud Mammeri University).

OECD. (2020). FDI regulatory restrictiveness index. OECD Publishing.

Othman, N. O. M. (2009). Foreign investment guarantees in Arab countries. Dar Al-Nahda Al-Arabiya.

Ouadjaout, S., & Azzouz, M. (2026). Credit and financial analysis of investment bank loan applications: An empirical assessment of financial evaluation techniques and decision-making practices at the Bank of Agriculture and Rural Development (BADR) – Tissemsilt Branch. Science, Education and Innovations in the Context of Modern Problems, 9(1), 1014–1021. https://doi.org/10.56334/sei/9.1.94

Qasouri, R. (2011). The legal system for foreign investment in developing countries (Doctoral dissertation, University of Batna).

Saldaña, J. (2021). The coding manual for qualitative researchers (4th ed.). SAGE Publications.

Sadouki, Y. (2026). The problem of bank financing of private investment projects in the tourism sector in Algeria. Science, Education and Innovations in the Context of Modern Problems, 9(1), 773–779. https://doi.org/10.56334/sei/9.1.69

UNCTAD. (2023). World investment report 2023: Investing in sustainable energy for all. United Nations.

World Bank. (2020). Doing business 2020: Comparing business regulation in 190 economies. World Bank Publications.