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Economic Growth and Investment in the Arab World

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Author Info
Xavier Sala-i-Martín ()
Elsa V. Artadi

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Abstract

This paper analyses the economic growth performance in the Arab world over the last forty years. The Arab world has managed to reduce poverty performance despite its relatively disappointing growth performance. We relate this poor performance of both oil and non-oil producers to investment. Contrary to widespread belief, we do not find evidence that low quantity of investment is the main of low growth. The decline in the investment rate followed rather than preceded the reduction in the aggregate growth rate. We conclude that the low quality of investment projects is the key determinant of growth. The excessive reliance on public investment, the low quality of financial institutions, the bad business environment (due to political and social instability and to excessive public intervention and overregulation) and the low quality of human capital are important determinants of systematically unproductive investment decisions and, thus, low economic growth.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 683.

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Date of creation: May 2003
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Handle: RePEc:upf:upfgen:683

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Web page: http://www.econ.upf.edu/

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Related research
Keywords: Economic growth; investment; the Arab World;

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Find related papers by JEL classification:
O0 - Economic Development, Technological Change, and Growth - - General
O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies

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References listed on IDEAS
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.:
  1. William Easterly & Ross Levine, 2002. "It's Not Factor Accumulation: Stylized Facts and Growth Models," Working Papers Central Bank of Chile 164, Central Bank of Chile. [Downloadable!]
  2. Amer Bisat, 1997. "Growth, Investment, and Savings in the Arab Economies," IMF Working Papers 97/85, International Monetary Fund.
  3. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December. [Downloadable!] (restricted)
  4. William Easterly & Michael Kremer & Lant Pritchett & Lawrence H. Summers, 1993. "Good Policy or Good Luck? Country Growth Performance and Temporary Shocks," NBER Working Papers 4474, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Anthony B. Atkinson & Andrea Brandolini, 2001. "Promise and Pitfalls in the Use of "Secondary" Data-Sets: Income Inequality in OECD Countries As a Case Study," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 771-799, September. [Downloadable!] (restricted)
  6. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, Oxford University Press, vol. 11(2), pages 357-82, May.
    Other versions:
  7. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, Oxford University Press, vol. 10(3), pages 565-91, September.
  8. Ravallion, Martin & Datt, Gaurav & van de Walle, Dominique, 1991. "Quantifying Absolute Poverty in the Developing World," Review of Income and Wealth, Blackwell Publishing, vol. 37(4), pages 345-61, December.
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Cited by:
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  1. Signe Krogstrup & Linda Matar, 2005. "Foreign Direct Investment, Absorptive Capacity and Growth in the Arab World," HEI Working Papers 02-2005, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  2. Daniele, Vittorio & Marani, Ugo, 2006. "Do institutions matter for FDI? A comparative analysis for the MENA countries," MPRA Paper 2426, University Library of Munich, Germany. [Downloadable!]
  3. Dalia Hakura, 2004. "Growth in the Middle East and North Africa," IMF Working Papers 04/56, International Monetary Fund. [Downloadable!]
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