Investment and Growth in the Arab World - A Scoping Note

Policy Papers, May 2, 2016

Source details

Enhancing public and private investment, and ensuring that this translates into higher growth and employment, have long been key policy challenges in Arab countries.
Reflecting an improvement in policies and global conditions, investment rates in Arab countries have increased over the past couple of decades.
Despite these improvements—and notwithstanding significant differences across the region—investment has on average been somewhat weaker than in peer countries and less effective at generating growth.
Private investment, particularly foreign direct investment (FDI), has underperformed significantly.
Public capital spending has benefited from high oil prices in resource–rich countries, but has continued to lag in oil importers.

Investment rates in Arab countries increased over the past couple of decades.
Investment performance relative to peers: on average somewhat weaker and less effective at generating growth.
Private investment shortfall: private investment and FDI have underperformed significantly.
Public investment divergence: resource–rich countries saw benefits from high oil prices; oil importers continued to experience lagging public capital spending.

Strengthen both public and private investment to translate into higher growth and employment.
Address underperformance of private investment, with particular attention to FDI.
For oil importers, prioritize measures to raise public capital spending effectiveness and levels.

Source: Investment and Growth in the Arab World - A Scoping Note (May 2, 2016), International Monetary Fund.

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