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Do Developing Countries Benefit from Foreign Direct Investments? An Analysis of Some Arab and Asian Countries

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  • Razzak Weshah A.

    (Arab Planning Institute, Kuwait City, Kuwait)

  • Bentour El M.

    (Arab Planning Institute, Kuwait City, Kuwait)

Abstract

In addition to the widely-believed positive effects on growth, employment, and wages, foreign direct investments (FDI) are often perceived as sources of funds for development. Developing countries, especially low income and emerging economies, welcome FDIs because of their favorable budgetary implications. All of this resulted in increasing global FDIs. We discuss some specification and estimation problems that might affect the estimation of the rate of returns on FDI, and provide new figures for a number of FDI-receiving Arab countries. We compare the results to those of some Asian countries, and discuss the policy implications. There is evidence that Arab countries have, relatively, benefited from their efforts to open their economies, to reform their institutions and to attract FDIs.

Suggested Citation

  • Razzak Weshah A. & Bentour El M., 2013. "Do Developing Countries Benefit from Foreign Direct Investments? An Analysis of Some Arab and Asian Countries," Review of Middle East Economics and Finance, De Gruyter, vol. 9(3), pages 357-388, December.
    • Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:3:p:357-388:n:2
    DOI: 10.1515/rmeef-2012-0031
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    More about this item

    Keywords

    rate of return on FDI; estimation and specification problems; panel data;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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