Foreign Direct Investment, Financial Development, and Economic Growth: Evidence from the Arab Countries

Mohammed Omran and Bolbol Ali
Additional contact information
Bolbol Ali: Arab Monetary Fund, Economic Policy Institute

Review of Middle East Economics and Finance, 2003, vol. 1, issue 3, 37-55

Abstract: The emerging literature on foreign direct investment (FDI) now stipulates that FDI's positive impact on growth depends on absorptive capacities. Prime among these capacities is financial development. The paper provides support to this thesis in the context of the Arab countries whose financial system is predominantly bank-based. It finds that Arab FDI will have a favorable effect on growth if interacted with financial variables at a given threshold level of development. It also finds that in reform countries FDI could Granger cause financial development. The conclusions that emerge from the paper are that domestic financial reforms should precede policies promoting FDI, investment measures should enhance the environment for all investors--foreign and domestic alike--and liberal commercial policies should be designed as initial measures to attract FDI.

Keywords: FDI; financial development; economic growth; TFP; Arab countries (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (59)

Downloads: (external link)
https://doi.org/10.2202/1475-3693.1014 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:rmeecf:v:1:y:2003:i:3:n:3

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/rmeef/html

DOI: 10.2202/1475-3693.1014

Access Statistics for this article

Review of Middle East Economics and Finance is currently edited by Ghassan Dibeh

More articles in Review of Middle East Economics and Finance from De Gruyter
Bibliographic data for series maintained by Peter Golla ().