Download Proceedings of 8th Asia-Pacific Business Research Conference

Proceedings of 8th Asia-Pacific Business Research Conference
9 - 10 February 2015, Hotel Istana, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-71-9
The Impact of FDI on Economic Integration in the Arab
World: A Dynamic GMM Approach
Mohamed Elafif 1
Restrictions dismantling and economic impediments elimination
become common features in the economic integration across
diverse economies in the world, in which globalization e nf orc es
economies to be more cooperative. While many countries in
different regions in the world such as Europe countries have
increased their intra-region capital flows, investment among Arab
countries has been a relatively small portion of their total
foreign direct investment (FDI). The reasons for the weakness in
intra-Arab FDI are divided into two parts: economic and political.
Based on the fundamentals of the gravity model and using
gradual panel data regressions; fixed effects, random effects and
a dynamic panel system (Generalized Moments Method GMM) this
paper analyses the determinants of FDI f l o w s a m o n g Arab
countries during the 1985-2013 period. Despite the potential
expansion of intra-Arab FDI, this paper argues that the possibility
for expansion needs - in addition to other factors – a
harmonization of economic policies and investment procedures
among the Sub-Regional Unions of Arab countries such as the
Gulf Cooperation Council (GCC). Furthermore, diminishing the
gap between G D P a n d per capita GDP of the Arab countries is
important for enhancing intra-Arab FDI and hence promoting
economic integration amongst the Arab countries.
Keywords: FDI, Economic Integration, Panel Data, dynamic panel system (GMM)
and Gravity model.
1
Dr. Mohamed Elafif, Department of Finance and Economics, College of Business, Qatar
University. Email: [email protected]