Foreign Direct Investment in The Arab World: Creating The Missing Link
Levels of FDI in MENA are characterized by four main features. First, FDI flows into MENA have not kept pace with flows to the rest of the world, and they have been lower than the average for all other regions of the world. Second, most FDI flows have gone only to a handful of countries, and have been concentrated in a few sectors with limited investment scope. The third feature is that FDI stocks and flows have constituted a small part of the region’s economies both in terms of gross fixed capital formation and gross domestic product. The fourth feature, possibly the only piece of good news, is that intra-Arab investment comprises a significant proportion of FDI inflows to countries in the region, and is likely to be underestimated in international financial statistics. This paper suggests a more variegated, even case-by-case look at the way we approach FDI. After reviewing the global and regional picture on FDI, and taking a look at the record for Arab countries, the paper suggests some fine-tuning in the way we structure efforts to attract FDI. For the non-oil economies in particular, where entrepreneurial talent abounds among the highly educated members of the populations, I suggest a shift in policy balance that might re-formulate some FDI incentives for strategic sectors such as information and communication technology, and services. Such efforts might very well yield relatively higher positive externalities than what Arab countries have reported to date. The argument becomes even more compelling when we consider that many of the requisite conditions necessary to attract higher levels of “traditional” FDI to the Middle East are not likely to become more abundant soon for structural and geopolitical reasons. There has been reform in the region, but it has been slow and time has increasingly high opportunity costs for countries with large proportions of unemployed youth, a good number of them fairly well skilled.
|Date of creation:||03 2003|
|Date of revision:||03 2003|
|Publication status:||Published by The Economic Research Forum (ERF)|
|Contact details of provider:|| Postal: 21 Al-Sad Al Aaly St. Dokki, Giza|
Web page: http://www.erf.org.eg
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Berthelemy, Jean-Claude & Demurger, Sylvie, 2000. "Foreign Direct Investment and Economic Growth: Theory and Application to China," Review of Development Economics, Wiley Blackwell, vol. 4(2), pages 140-155, June.
- de Mello, Luiz R, Jr, 1999.
"Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data,"
Oxford Economic Papers,
Oxford University Press, vol. 51(1), pages 133-151, January.
- L.R. de Mello Jr., 1996. "Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data," Studies in Economics 9615, School of Economics, University of Kent.
- Asafu-Adjaye, John, 2000. "The Effect of Foreign Direct Investment on Indonesian Economic Growth," Economic Analysis and Policy, Elsevier, vol. 30(1), pages 49-62, March.
- Ellingsen, Tore & Warneryd, Karl, 1999. "Foreign Direct Investment and the Political Economy of Protection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 357-379, May.
- Ellingsen, T. & Wärneryd, K.E., 1993. "Foreign direct investment and the political economy of protection," Discussion Paper 1993-8, Tilburg University, Center for Economic Research.
- Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
- Marta Castilho & Soledad Zignago, 2000. "Commerce et IDE dans un cadre de régionalisation. Le cas du Mercosur," Revue Économique, Programme National Persée, vol. 51(3), pages 761-774.
- Castilho, Marta & Zignago, Soledad, 2002. "FDI, Trade and Integration in Mercosur," MPRA Paper 43886, University Library of Munich, Germany.
- Driffield, Nigel, 1999. "Indirect Employment Effects of Foreign Direct Investment into the UK," Bulletin of Economic Research, Wiley Blackwell, vol. 51(3), pages 207-221, July.
- Ray Barrell & Dawn Holland, 2000. "Foreign Direct Investment and Enterprise Restructuring in Central Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(2), pages 477-504, July.
- Tina Yiping Chen, 2000. "Foreign Direct Investment and Intra-Industry Trade - the Case of the United States," Asia Pacific Economic Papers 303, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
- Chen, Tain-Jy & Ku, Ying-Hua, 2000. "The effect of foreign direct investment on firm growth: the case of Taiwan's manufacturers," Japan and the World Economy, Elsevier, vol. 12(2), pages 153-172, May.
- Regis Bonelli, 1999. "A note on foreign direct investment and industrial competitiveness in Brazil," Oxford Development Studies, Taylor & Francis Journals, vol. 27(3), pages 305-327.
- Yih-Chyi Chuang & Chi-Mei Lin, 1999. "Foreign direct investment, R&D and spillover efficiency: Evidence from Taiwan's manufacturing firms," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 117-137. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:erg:wpaper:0309. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Namees Nabeel)
If references are entirely missing, you can add them using this form.