The External Wealth of Arab Nations : Structure, Trends, and Policy Implications

The paper makes two main contributions. First, it analyzes net foreign assets and liabilities in selected Arab countries over the past two decades, emphasizing the relative significance of direct versus portfolio investment. It distinguishes between foreign direct investment, portfolio equity invest...

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Main Authors:	Mohieldin, Mahmoud, Rostom, Ahmed, Zaki, Chahir
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	NET FOREIGN ASSETS FOREIGN DIRECT INVESTMENT EXTERNAL DEBT SOVEREIGN WEALTH FUNDS ARAB ECONOMIES OIL-EXPORTING COUNTRY PORTFOLIO INVESTMENT OFFICIAL RESERVES FINANCIAL DEVELOPMENT
Online Access:	http://documents.worldbank.org/curated/en/615571578323311199/The-External-Wealth-of-Arab-Nations-Structure-Trends-and-Policy-Implications http://hdl.handle.net/10986/33152

id	okr-10986-33152
recordtype	oai_dc
spelling	okr-10986-331522022-09-20T00:14:20Z The External Wealth of Arab Nations : Structure, Trends, and Policy Implications Mohieldin, Mahmoud Rostom, Ahmed Zaki, Chahir NET FOREIGN ASSETS FOREIGN DIRECT INVESTMENT EXTERNAL DEBT SOVEREIGN WEALTH FUNDS ARAB ECONOMIES OIL-EXPORTING COUNTRY PORTFOLIO INVESTMENT OFFICIAL RESERVES FINANCIAL DEVELOPMENT The paper makes two main contributions. First, it analyzes net foreign assets and liabilities in selected Arab countries over the past two decades, emphasizing the relative significance of direct versus portfolio investment. It distinguishes between foreign direct investment, portfolio equity investment, official reserves, and external debt. Second, the paper examines the effects of policy variables that affect the accumulation of net foreign assets and its components, analyzing how the existence of a sovereign wealth fund, the country's exchange rate regime, and the development of its financial system affect its net foreign assets. The main findings show that the presence of a sovereign wealth fund is positively and statistically significantly associated with foreign direct investment in Arab countries. Financial development (defined as credit to the private sector as a percentage of gross domestic product) is also statistically significant across various regressions. The more financially developed a country is, the more it should invest in riskier assets, such as portfolio assets. But Arab investors are more risk averse than investors elsewhere. Oil-exporting countries tend to invest more in debt assets than in portfolio assets. For oil-importing countries, financial development is the most important determinant of foreign direct investment. 2020-01-09T15:55:53Z 2020-01-09T15:55:53Z 2020-01 Working Paper http://documents.worldbank.org/curated/en/615571578323311199/The-External-Wealth-of-Arab-Nations-Structure-Trends-and-Policy-Implications http://hdl.handle.net/10986/33152 English Policy Research Working Paper;No. 9103 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Middle East and North Africa Middle East North Africa
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	NET FOREIGN ASSETS FOREIGN DIRECT INVESTMENT EXTERNAL DEBT SOVEREIGN WEALTH FUNDS ARAB ECONOMIES OIL-EXPORTING COUNTRY PORTFOLIO INVESTMENT OFFICIAL RESERVES FINANCIAL DEVELOPMENT
spellingShingle	NET FOREIGN ASSETS FOREIGN DIRECT INVESTMENT EXTERNAL DEBT SOVEREIGN WEALTH FUNDS ARAB ECONOMIES OIL-EXPORTING COUNTRY PORTFOLIO INVESTMENT OFFICIAL RESERVES FINANCIAL DEVELOPMENT Mohieldin, Mahmoud Rostom, Ahmed Zaki, Chahir The External Wealth of Arab Nations : Structure, Trends, and Policy Implications
geographic_facet	Middle East and North Africa Middle East North Africa
relation	Policy Research Working Paper;No. 9103
description	The paper makes two main contributions. First, it analyzes net foreign assets and liabilities in selected Arab countries over the past two decades, emphasizing the relative significance of direct versus portfolio investment. It distinguishes between foreign direct investment, portfolio equity investment, official reserves, and external debt. Second, the paper examines the effects of policy variables that affect the accumulation of net foreign assets and its components, analyzing how the existence of a sovereign wealth fund, the country's exchange rate regime, and the development of its financial system affect its net foreign assets. The main findings show that the presence of a sovereign wealth fund is positively and statistically significantly associated with foreign direct investment in Arab countries. Financial development (defined as credit to the private sector as a percentage of gross domestic product) is also statistically significant across various regressions. The more financially developed a country is, the more it should invest in riskier assets, such as portfolio assets. But Arab investors are more risk averse than investors elsewhere. Oil-exporting countries tend to invest more in debt assets than in portfolio assets. For oil-importing countries, financial development is the most important determinant of foreign direct investment.
format	Working Paper
author	Mohieldin, Mahmoud Rostom, Ahmed Zaki, Chahir
author_facet	Mohieldin, Mahmoud Rostom, Ahmed Zaki, Chahir
author_sort	Mohieldin, Mahmoud
title	The External Wealth of Arab Nations : Structure, Trends, and Policy Implications
title_short	The External Wealth of Arab Nations : Structure, Trends, and Policy Implications
title_full	The External Wealth of Arab Nations : Structure, Trends, and Policy Implications
title_fullStr	The External Wealth of Arab Nations : Structure, Trends, and Policy Implications
title_full_unstemmed	The External Wealth of Arab Nations : Structure, Trends, and Policy Implications
title_sort	external wealth of arab nations : structure, trends, and policy implications
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/615571578323311199/The-External-Wealth-of-Arab-Nations-Structure-Trends-and-Policy-Implications http://hdl.handle.net/10986/33152
_version_	1764478103000711168

The External Wealth of Arab Nations : Structure, Trends, and Policy Implications

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