The purpose of the paper is to study the extent and potential significance of foreign direct investment (FDI) in the economic development of the Arab countries. The paper will first highlight the importance of international capital and financial flows in the developing countries, with a special emphasis on the position of such flows, especially FDI, in the Arab world.
What role do stock returns play in determining investment? In this paper, we investigate the independent effect of stock returns on investment within the context of four hypotheses: passive informant, active informant, financing, and stock market pressure. Using a sample of 83 firms from five Arab countries during 1996-2001, we find that the passive informant hypothesis holds true, with only sales and debt growth as significant determinants of capital expenditures. Surprisingly, cash flow has no effect on investment, which could mostly be due to the dividend policy of Arab firms.
The paper investigates questions relating to reserves adequacy, optimality, and adjustment for seventeen Arab countries during the period 1980-2002. In section II we analyze reserve adequacy from the vantage of three reserve ratios: reserves to imports, to capture current account sustainability; reserves to short-term debt, to assess debt sustainability; and reserves to broad money, to conjecture the extent of capital flight.
There are two main competing approaches with regard to market structure and business performance. These are the structure-conduct-performance (SCP) paradigm and the efficient market (EM) hypothesis. The former emphasizes market collusion, while the latter stresses the superior operating efficiency of particular firms. In this paper we present the results from testing both hypotheses in the Kuwaiti, Saudi, and UAE banking markets for the period 1999-2002. The results support the EM hypothesis in both Kuwait and the UAE, and the SCP paradigm in Saudi Arabia.
The paper analyses the determinants of intra-Arab exports and FDI during the 1997-2003 period. It does that against a background of multitude of preferential trading arrangements currently under way in the Arab world. Section II presents a brief description of intra-Arab exports, their intensity, and their comparative advantage, in addition to the main features of intra-Arab FDI.