This research project deals with foreign direct investment (FDI) trying to identify its antecedents and its consequences. The project starts by a historical review and an examination of past studies to situate the study better. A rather new statistical technique (Recursive System) was used to try and find the statistically significant variables affecting FDI. The researcher reached interesting results in his study by finding that political stability and government incentives together affect positively FDI and both of them affect economic performance independently and via FDI.