In this work we study the effect of FDI on the economies of the southern Mediterranean countries. Taking into account the positive effects and starting from the establishment of a simultaneous equation model applied to 8 countries, we have tried to demonstrate the mechanisms through which FDI affects economic growth. The estimation of our model shows that exports and, to a lesser extent, human capital and domestic investment are the most promising factors in the creation of positive effects. However, these results are weakly motivating to generate positive growth or at least to reduce the negative effects of FDI.