The paper reviews the exchange rate arrangements, both official and actual, currently in place in the Arab countries, and the economic performance of these countries under different exchange rate regimes. Based on country-specific economic circumstances, the paper also provides recommendations as to the desired choice of actual exchange rate policies and regimes

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.