Capacity Of Countries Research Articles

Article on Brand Positioning of Cement industry in India and the Dealer's preference-A case Study in the District of Ganjam (Odisha, India)

Cement is no longer just a commodity. Prices have remained unaffected even during monsoons. The Indian cement industry has nearly doubled its production capacity in the last 10 years to 212 million tonnes and newer players are becoming bigger with manufacturing units across the country. The India-versus-China story – the competition for the next economic superpower status – has China leading the race in all sectors except Telecom and IT. What could skew this equation a little, however, is the success story of Indian cement. During the last decade this segment has chalked up an astonishing compound annual growth rate (CAGR) of 8% compared to the world cement industry average of 3.5% and China's 7.2% (Source: Indian Brand Equity Foundation).Even though the Indian cement business is more than 100 years old, it was sluggish and inefficient, languishing under government controls until the early 1980s. Postliberalisation, however, the industry has matured and is flourishing under the open regime. It has grown to a production capacity of 154 million tons per annum (MTPA). This record not only beats that of developed countries like the US and Japan, but also firmly establishes India as these cond largest global player after China. T he Indian government's better-late-than never awakening to the importance of infrastructure and concomitant support for its development, gave cement its rightful place in the economy. As the housing sector boomed and projects such as state and national highways took wing, the Indian cement industry's production capacity leap-fogged. The world's largest cement companies –Lafarge and Holcim – have now entered India. A spate of mergers and acquisitions – designed to exploit the growth in demand – have since occurred. Two large groups – the Ambuja/ACC combine and Grasim contribute almost 35 MTPA each to the country's total annual capacity. By no means has demand for cement peaked. As development picks up greater momentum, cement companies will continue to surge ahead. The one strong pointer to the opportunities is a simple fact: the world's average per capita consumption is 260kilograms. In India it is still trailing at 136 kilos.

A New Infrastructure for Monitoring Social Mobility in the United States.

The country's capacity to monitor trends in social mobility has languished since the last major survey on U.S. social mobility was fielded in 1973. It is accordingly difficult to evaluate recent concerns that social mobility may be declining or to develop mobility policy that is adequately informed by evidence. This article presents a new initiative, dubbed the American Opportunity Study (AOS), that would allow the country to monitor social mobility efficiently and with great accuracy. The AOS entails developing the country's capacity to link records across decennial censuses, the American Community Survey, and administrative sources. If an AOS of this sort were assembled, it would open up new fields of social science inquiry; increase opportunities for evidence-based policy on poverty, mobility, child development, and labor markets; and otherwise constitute a new social science resource with much reach and impact.

Enhanced-Pumped-Storage: Combining pumped-storage in a yearly storage cycle with dams in cascade in Brazil

The new frontier for hydropower electricity generation in Brazil, the Amazon region, cannot be used for energy storage as the construction of storage reservoirs would have deep environmental and social impacts, thus run-of-the-river dams have been built instead. If Brazil still wants to generate 80% of its electricity from hydropower, there is the need to increase the country's energy storage capacity so that the excess generation coming from the dams in the Amazon region during the wet period can be used during the dry period. This article presents four ways to increase the storage capacity of a watershed. The most innovative alternative involves a large-scale pumped-storage site combined with a series of hydropower dams in cascade, which could store energy by pumping water to a new reservoir during the wet period and generate energy by releasing the stored water during the dry period. Even though pumped storage schemes have an average efficiency of around 75%, it has been calculated that the combination of a pumped storage site and a series of hydroelectric dams in cascade can increase the overall storage efficiency up to 90% and double the storage capacity of a watershed. This scheme was called EPS (Enhanced-Pumped-Storage).

Breaking the Deadlock: Towards a New Intergovernmental Relationship in Canadian Healthcare.

Canadians are, at best, only "marginally confident" in the future of Canada's healthcare system (Nanos and Jenkins 2014). They are skeptical that simply spending more money can address the issues underlying Canadian healthcare, yet they also doubt the country's capacity to harness innovative strategies to improve healthcare (ibid). These issues are central to Canadians' concerns about healthcare reform: increased funding is no guarantee of better quality or access to healthcare and may reinforce inefficient patterns of health spending (Canadian Institute for Health Information 2012). For example, Contandriopoulos showed that since 2007 in Québec, total physician compensation, average physician compensation and average unit cost per service all rose quickly but the total number of services, number of services per capita and average number of services per physician were either level or declined (Contandriopoulos and Perroux 2013). However, simply pressuring provinces and territories to do more with less may also be counterproductive, because it creates immediate delivery pressures that reduce opportunities for careful deliberation of strategies for enduring and meaningful improvement. In this article, we present an approach to making the Canadian healthcare system more effective, efficient and sustainable. The program maintains the autonomy of the provinces and territories while renewing federal leadership. The core idea is to use federal healthcare transfer payments to incentivize greater efficiency, better access, better outcomes and increased health equity. Our goal is to set out this model for discussion. We acknowledge that measuring health outcomes, healthcare quality and health equity is challenging. Developing and implementing such measures will require conceptual development and detailed technical plans that are beyond the scope of this article. Moreover, we can only touch briefly on the political processes required to implement a model that balances federal leadership with provincial autonomy. Our goal here is to stimulate discussion by presenting a new model for funding and delivering healthcare.

Analysis of water governance in Malawi: towards a favourable enabling environment?

This paper examines the enabling environment for effective water governance in Malawi by specifically determining the extent to which the water acts and policies of Malawi reflect international water governance principles of participation, accountability and transparency. It is argued that governance issues determine the extent to which sound and equitable water sharing is achieved among competing uses. Despite the fact that Malawi has vast freshwater resources, the country experiences chronic water shortages in some parts; this is due to disparities in water distribution to the extent that the country has been classified to be going towards water stress by 2025. In this study, it was found that the Water Resources Act of 1969, which is currently being used by the country has not clearly set the scene for good water governance. This is despite a number of treaties on water resources management that the country has ratified. However, despite the failure to update the archaic Act of 1969, the country has taken some important strides such as the development of the National Water Policy of 2005. This policy attempts to espouse key governance prerequisites required to improve the country's capacity to deal with the impeding water crisis situation.

FDI-GROWTH NEXUS IN AFRICA: DOES GOVERNANCE MATTER?

This study examined the effects of governance on FDI-growth nexus in Africa both at the aggregated and disaggregated level. It adopted the methodology of panel data technique to examine the interrelationship. The results showed that governance in many African countries was quite weak and thus inhibited growth. When governance was interacted with FDI, it brought about positive and increased growth. This finding was robust to different estimation techniques and disaggregated governance dimensions. The paper suggested that African governments that are desirous of attracting more FDI and thus improving on growth must enhance their governance structure.Keywords: Foreign Direct Investment, Growth, Governance, Panel Data, AfricaJEL classification: C33, F21, O551. INTRODUCTIONThe role of Foreign Direct Investment (FDI) as a source of capital has become increasingly important to many emerging countries in the world and Sub-Saharan Africa (SSA) countries in particular. FDI inflow has been critical because of its potential and actual benefits to growth, employment generation, technological know-how, enhanced efficiency and competitiveness, supplements to domestic savings and integration into the global economy (Asiedu, 2002). In the developing world, FDI has become the most stable and largest component of capital flows. Consequently, FDI has become an important alternative in the development finance process (Global Development Finance, 2005; Adams, 2009ab Mengistu and Adams, 2007).Though many researchers allude to the importance of FDI in the move towards economic growth, in recent times, the discussion has basically moved from whether developing countries should attract FDI, to how developing countries can attract FDI (Asiedu and Lien, 2011). In the light of this, many SSA countries have undertaken several policies that are aimed at attracting FDI. For instance, many have initiated economic reforms that are aimed at increasing the roles of the private sector through privatising state-owned enterprises, they have sought to restore and maintain macroeconomic stability through devaluation of overvalued national currencies and reduction of inflation rates and budget deficits. They have equally improved the regulatory framework for FDI by strengthening the rule of law, engaging in trade liberalization, and improving legal institutions, telecommunications and transportation infrastructure amongst others (UNCTAD, 1999). However, despite these reforms, SSA has not experienced the dramatic impact of increase in FDI on its growth as experienced in other parts of the developing world (Asiedu, 2005).Indeed the empirical evidence to date on the effects of FDI on economic performance is not definite. Some studies indicate a positive impact of FDI on economic growth (Ghura and Hadjimichael, 1996; Bengoa and Sanchez-Robles, 2003; among others) while other studies report otherwise (Carkovic and Levine, 2002; Durham, 2004). On the other hand, some other group of studies suggest that the effect of FDI on a host country's economy is dependent on certain factors such as the country's absorptive capacity in terms of its human capacity, the country's the level of development, (Borensztein et al., 1998; Mengistu and Adams, 2007), its sectoral pattern (Dutt, 1997) and its financial development (Alfaro, et al., 2006). These studies seem to suggest that for countries in SSA, to reap the benefits that ensue from FDI, if any, may be more difficult than attracting FDI because the policies that promote FDI to SSA also have a direct impact on its long-term economic growth (Asiedu, 2005). …

The National Guard as a Strategic Hedge

ABSTRACT: This article suggests alternatives to proposed organizational reductions and balance between the Active force and the National Guard. It examines specifics of the cost, use, and effectiveness arguments on both sides of this contentious issue. Finally, this article serves as a catalyst to renew the broader public discussion regarding the proper roles of the regulars and the militia--the National Guard--as integral parts of the nation's defense and security architecture. ********** As the year 2014 approaches, the nation anticipates the close of what has widely been described as the longest war in our country's history. With the assumed ending of that war, many citizens and political leaders anticipate our regular military will be required to do what it has historically always done at the end of a war--shrink. Despite the fact the war in Afghanistan is not the nation's longest, and our involvement there will likely not entirely end in 2014, the broad expectation or even demand that the military's size and budget be reduced is both normal and necessary. (1) This expectation of significant post-war regular military reductions reflects long, deep-rooted, and traditional national practice. Indeed, following most of our country's earliest wars there was a significant national movement to eliminate the regular army altogether, and return to our traditional reliance on the citizen-soldiers of the militia for the country's defense. After the Revolutionary War the Continental was, in fact, effectively disbanded, with less than one hundred soldiers retained to guard stores. (2) After the War of 1812, the War with Mexico, the Civil War, and the War with Spain, the regular army was drastically reduced, and in spite of continuous fighting on the Western frontier, the nineteenth-century regular army never exceeded a peacetime strength of approximately 30,000. (3) In contrast, the organized militia strength remained at well over 100,000 during this period. (4) The first half of the twentieth century was little different, with the regular army (including the nascent Air Force) reaching a strength of only 125,000 on the eve of the Second World War in 1936. (5) That same year the strength of the National Guard was roughly 400,000. (6) The post-conflict reductions of the and the Air Force after the Second World War, the Korean War, and the War in Vietnam were not as drastic as after previous wars, due to the ongoing Cold War with the Union of Soviet Socialist Republics (USSR), but there were reductions nonetheless. Finally, in the 1990s following the first Gulf War and the collapse of the Soviet Union, the active military once again was reduced in hopes of a peace dividend. Certainly these reductions were not as great as those of many previous major post-war periods, but they were significant and perceived by the nation and its leadership as both normal and necessary. At the same time, the combined strength of the National Guard, both and Air, remained close to its historic norm, approximately 450,000 soldiers and airmen. One constant has existed through all these wartime expansions and post-war contractions of the regular military. That constant has been the relatively steady size of, and national reliance on, the nation's militia (since 1903 the National Guard) as a strategic hedge to allow for rapid expansion of the country's military capacity in time of emergency. The militia (and later the National Guard) has provided the expansible Army function first advocated by Secretary of War John C. Calhoun in the 1820s, and has always been federalized (or has provided state volunteer units) to augment regulars during emergencies. As a result, much of American military history is really the history of the activated militia or National Guard; there were virtually no regular units at Gettysburg, for example, and the second American division to deploy to France in 1917 was the 26th Yankee Division, composed solely of National Guard units from the New England states. …

Transfer of reputation: Multinational banks and perceived creditworthiness of transition countries

ABSTRACTHow do international investors evaluate sovereign borrowers whose histories and institutions are too new or weak to send strong signals about their creditworthiness? In this paper, I suggest that the perceived creditworthiness of many transition countries’ governments rests on a ‘transfer’ of good reputation from prestigious multinational banks, as foreign direct investors. The entry of reputable foreign banks into a transition country signals to international financial markets about the financial strength of that host economy. It also involves the transfer of the status of lender of last resort to the foreign parent bank. Foreign bank penetration can thus create optimistic expectations about a host country's capacity to service its sovereign debt. Using panel data for 23 transition economies during the period of 1996–2009, my empirical results provide support for the argument stressing the exogenous role of foreign financiers as enhancers of the credibility of host country governments. The results are robust to instrumental variable analysis and the inclusion of number of controls for alternative determinants of investors' perceptions of country risk. This proposition is further backed by evidence from three transition countries: Hungary, Estonia and Ukraine.

The health financing transition: A conceptual framework and empirical evidence

Almost every country exhibits two important health financing trends: health spending per person rises and the share of out-of-pocket spending on health services declines. We describe these trends as a “health financing transition” to provide a conceptual framework for understanding health markets and public policy. Using data over 1995–2009 from 126 countries, we examine the various explanations for changes in health spending and its composition with regressions in levels and first differences. We estimate that the income elasticity of health spending is about 0.7, consistent with recent comparable studies. Our analysis also shows a significant trend in health spending – rising about 1 per cent annually – which is associated with a combination of changing technology and medical practices, cost pressures and institutions that finance and manage healthcare. The out-of-pocket share of total health spending is not related to income, but is influenced by a country's capacity to raise general revenues. These results support the existence of a health financing transition and characterize how public policy influences these trends.

Structural Funds and Economic Crises: Romania's Absorption Paradox

EU officials and government authorities are considering that structural funds may represent the instrument by which EU Member States can recover from the present crisis. However, theoretical evidence suggests that the absorption capacity of any country is also affected by economic downturns. Using Romania as a case study, we will attempt to solve this peculiar dilemma by analyzing three factors which are paramount for the absorption of structural funds, respectively: the macroeconomic and financial capacity, the administrative efficiency and people's uncertainty regarding the European funding system. Preliminary results seem to confirm that a country's capacity to spend the allocated money is also crippled by economic depressions.

Sustainable tourism, climate change and sea level rise adaptation policies in Barbados

AbstractThe vulnerability of tourism‐dependent communities, coastal tourism facilities, and beaches to climate change demands the use of measures that can urgently minimise vulnerability and in the long term achieve sustainable development. This paper makes policy recommendations to address climate change and sea level rise challenges in small island developing states. Using Barbados as a case study, the paper found that innovations in policies and projects have offset the past ills of mass tourism and fortuitously now serve as pre‐emptive measures in adapting to climate change. The array of methods for combating these changes includes physical planning policies, integrated coastal zone management, and infrastructure projects. Among the key areas for policy innovation are the adoption of protection, accommodation, and retreat strategies, which are informed by rigorous cost‐benefit analysis and stakeholder consultation. Ecosystem‐based adaptation to climate change is also necessary, especially for islands where coral reef protection is urgent. Moreover, policy adjustments are required on building construction, water resources management, sewage treatment, coastal zone management, physical planning, and land management. Institutional constraints, including the lack of capacity to implement, monitor, and enforce measures, must also be addressed if progress is to be made in adapting to climate change. A major conclusion is that the severity of coastal damage, the importance of tourism to sustainable development, and the country's adaptive capacity play a key part in the selection and implementation of climate change adaptation measures.

A critical analysis of Peru's HIV grant proposals to the Global Fund

Peru has applied to six of the Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund) rounds for funding, achieving success on four occasions. The process of proposal development has, however, been criticised, especially concerning the use of evidence, relevance/consistency and performance indicators. We aimed to analyse the Peruvian Global Fund proposals according to those dimensions, providing feedback to improve future local efforts and inform global discussions around Global Fund procedures. We analysed the content of four HIV-focused proposals (rounds 2, 5, 6 and 8) regarding epidemic context, needs identification and prioritisation and monitoring and evaluation systems. Peruvian proposals submitted after round 1 were described as resulting from collaborative inputs involving formerly unrepresented sectors, principally ‘vulnerable populations’. However, difficulties arose regarding the amount and quality of evidence about the epidemiological context; limited consideration of social determinants of the epidemic; lack of theory-driven interventions, and little synergy across projects and the inclusion of weak monitoring and evaluation systems, with poor indicators and measurement procedures. Prioritising the development of analytical and technical skills to generate Global Fund proposals would enhance the country's capacity to produce and utilise evidence, improve the technical-political interface, strengthen information systems and lead to more informed decision making and accountability.

The electric energy potential of landfill biogas in Brazil

The increases in a country's energy capacity are related to its gross domestic product (GDP). In Brazil, increases in income and the consumption of goods and services have led to an increase in the generation of solid waste (SW), which is sent to landfills as a method of treatment and final disposal. The purpose of this study was to facilitate an increase in energy generation from renewable resources, specifically from landfills via thermal biogas plants, and the research was divided into two phases. The first phase involved the assessment of the potential population size contributing to the landfill, which could result in the installation of a financially viable enterprise to generate electricity in Brazil. Next, an estimate of the costs associated with the generation and collection of solid waste in Brazil was predicted by GDP prognoses, the latter being in accordance with the National Energy Balance (Balanço Energético Nacional – BEN) plan created by the Mines and Energy Ministry of Brazil (Ministério de Minas e Energia do Brasil – MME). The net present value (NPV) and internal rate of return (IRR) of each enterprise scenario was used in the first stage to assess the plan's financial viability. In the second stage, estimation curves such as logistics, decreasing rate of growth, and logarithmic curves were used to establish relationships between the generation scenarios and the projected collection of SW and projected GDP. Thus, a range of possible landfill biogas/methane generation values and installed energy capacities were created, considering the extreme maximum and minimum values. These values were related to the energy sources from residual fuels reported by BEN. The results demonstrated that such values still represented a small percentage (0.00020% in 2010 and 0.44496–0.81042% in 2030) of the projected energy generation from residual fuels. Thus, an urgent need was identified to formulate policies that would encourage landfills as a source of renewable energy, broadening the number of financially viable initiatives for energy generation from landfill biogas for populations of fewer than 200,000 inhabitants.

System dynamics model of debt accumulation in developing countries

Purpose – The purpose of this paper is to present a dynamic macroeconomic framework that identifies the fundamental structure of public debt accumulation process in developing countries and its two way linkages with economic growth and public finances. Within this framework, the objective of this study is to identify leverage points that may be utilized to slow down debt accumulation process without slowing down economic growth. Design/methodology/approach – The paper uses the system dynamics (SD) method to model and analyze the debt accumulation process. This method allows us to analyze the relationship between structure and behaviour of complex dynamic systems. This paper considers fiscal policy as the strategic element of the debt accumulation process and hence it considers seignorage and consequent inflation to be outside the model boundary. In other words the paper assumes that there exists an effective monetary policy that satisfies the objectives of the fiscal policy. Findings – Capping debt servicing (debt relief) increases the debtor country's capacity to invest and the higher investment will raise capacity to pay debt in the future, with some of the rewards going to the creditor. Financing public investment through borrowing produces the highest Debt-GDP ratio compared to all other polices considered. Widening of the tax base to include this informal sector without increasing the tax rate and reducing the extravagant non-debt current expenditure are effective endogenous policy options that help reduce considerably the Debt-GDP ratio. The best composite policy demonstrates that a reduction in the Debt-GDP ratio does not only require exogenous assistance (debt relief) but endogenous government and private sector responsibility to maintain fiscal discipline and generate growth. Originality/value – The unique characteristic of this model is the transparent way in which it represents the two-way feedback relationship between the debt, public finance and economic development taking into consideration the delays and non-linearities involved in this process.

International R&D Spillovers, Absorptive Capacity and Relative Backwardness: A Panel Smooth Transition Regression Model

We investigate how a country's absorptive capacity and relative backwardness affect the impact of international R&D spillovers on domestic Total Factor Productivity (TFP). To account for nonlinearities, we adopt a Panel Smooth Transition Regression approach, where a country's TFP elasticity to the foreign R&D stock is allowed to change smoothly across various identified extreme values, and the change is related to observable transition variables: human capital (capturing the country's absorptive capacity) and relative backwardness. The results suggest that absorptive capacity is positively associated with international R&D spillovers. In contrast with previous results, relative backwardness is instead found to have a negative and significant impact on international knowledge spillovers.

Assessing the roles that absorptive capacity and economic distance play in the foreign direct investment-productivity growth nexus

We further examine the channels through which Foreign Direct Investment (FDI) develops the national productivity of host countries. We investigate whether FDI is an effective channel of technological transfer across borders and whether that technology transfer is bi-directional: from an investing country to a host country and vice versa. In particular, an analysis is provided of whether FDI helps channel more resources towards the promotion of education activities and hence augments economic growth indirectly through augmenting the host country's absorptive capacity. Also, the analysis uses a novel approach to take into account the possibility that physical distances can act as a barrier to economic and technological interactions amongst countries, by embedding a measure of geographical distance into two specific channels: international trade and FDI. Empirical results obtained all lend strong support to these hypotheses.

Transforming the United Arab Emirates into a knowledge‐based economy

PurposeThis paper aims at exploring the role of science, technology and innovation (STI) in transforming the United Arab Emirates (UAE) into a knowledge economy (KE) by initially assessing the country's achievements implementing the KE pillars. It further evaluates the country's STI capacity and competence in exercising adoption and diffusion of knowledge.Design/methodology/approachA situational analysis and a comparative approach were exploited to describe the UAE's position in terms of transition to a KE, highlighting weaknesses, strengths and opportunities. Related discussions were supported by data made available from several international sources. The country's worldwide performance was particularly matched against that of the other members of the Gulf Cooperation Council (GCC) together with two more Asian transformation economies and also a few examples from other Arab and Muslim countries.FindingsApparently, the UAE has made important progress in the implementation of the KE pillars and transitioning to the innovation‐driven stage, particularly at the macro‐economic environment and quality of infrastructure levels, notably the ICT sector. However, the county is facing several challenges that require concerted efforts and rigorous follow‐up. For instance, the UAE is lagging behind most transformation economies and some GCC countries when it comes to investment in education and R&D activities. This hurdle impeded the country's ability to absorb, adapt and create new technology and knowledge. As a result, the country's economy is experiencing a negative trade balance in foreign technology transfer. The comparative and situational analysis methodology adopted in the context concluded several lessons and policy remarks.Originality/valueUsing the most updated data, this exercise stems from the country's need to examine the current status, a necessary step for realization of new prospects and adoption and application of future policies and programs.

The Nexus Between External Debt And Economic Growth In Nigeria (1981 – 2009).

The study seeks to determine the impact of external debt on Nigeria using annual data from 1981- 2009. In our empirical analysis, we run ordinary least square test to verify the statistical significance of the variables used and Johansen cointegration to determine the order of integration among the variables. Empirical investigations revealed that the coefficient of external debt is statistically significant at 5% while other variables such as prime lending rate. Growth rate of GDP are not statistically significant. Our cointegration result s revealed the existence of two cointegrating equations at 5% level of significance among Gross domestic product, external debt, PLR, GRGDP and GREXDS. The results show the existence of long-run relationship among the variables. I. Introduction External debt management refers to the establishment of the condition of issue and redemption of foreign loans. It involves the proceeds of administering the external public debt that is, providing for the payment of interest and arranging the refinancing of maturity bonds/debt. It involves a conscious and carefully planned schedule of the acquisition and retirement of loans contracted either for development purpose or to support the balance of payments. It makes use of estimates of foreign earnings, sources of exchange finance, sources of exchange finance, the project returns from the investment and the repayment schedule. It also includes an assessment of the country's capacity to service existing debts and a judgment on the desirability of contracting loans (CBN; 1996). Nigeria's economic histories in the pre and post independence era are important in order to understand the magnitude of her economic problems and the measures in the recent past to combat the external debt crisis and achieve sustainable economy recovery and growth. The nation's inability to meet all its debt service payments constitutes one of the serious obstacles to the inflow of external resources into the economy. The accumulation of debt service arrears, which is being compounded with penalty interest, has not permitted reduction in the debt stock, despite the fact that government has been servicing it external debt with US $2.0 billion annually between 1991 and 1997. The reasons for this are varied. In some cases, debt problems have mainly stemmed from the efficient use and control of borrowed funds by debtor countries. In most countries, returns on investment had not even debt servicing cost. While in others an adequate policy framework for debt management has led to accumulation of external debts that have proved excessive for the countries debt servicing capacity. Many debtors have faced much higher than anticipated growth in debt payment relative to their growth in their exports of gods and services.

Domestic Institutions, Capacity Limitations, and Compliance Costs: Host Country Determinants of Investment Treaty Arbitrations, 1987–2007

The number of investment treaty arbitrations has exploded in recent years. However, the distribution of known arbitral claims varies among states. Some states have had multiple claims brought against them, while others appear not to have experienced any. This article represents the first study to seek causal explanations for this variation. My principal hypothesis is that a country's institutional capacity for protecting investor rights should be negatively correlated with the number of treaty-based arbitral claims brought against it. A panel analysis suggests that, after controlling for other determinants, countries with greater institutional capacity experience fewer disputes than those with lower capacity. This finding reveals an important truth about investment treaties: while they may be designed to help developing countries compensate for domestic-level institutional deficiencies in order to attract more foreign investment, it is precisely those countries with the weakest institutions for which the costs of treaty compliance are likely to be the highest.

FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN ARAB COUNTRIES (1970-2008): AN INQUIRY INTO DETERMINANTS OF GROWTH BENEFITS

This paper investigates the relationship between Foreign Direct Investment (FDI) and economic growth in a group of 16 Arab countries from 1970 to 2008. The empirical analysis also addresses the role of what are identified in the literature as local for deriving growth benefits from FDI. Using a dynamic panel approach, it is found that the impact of FDI on economic growth in Arab countries is limited or negligible. The findings also suggest that financial development, trade openness, human capital and infrastructure quality are not significantly improving Arab countries' capacity to reap growth benefits from FDI. The paper suggests that the preconditions should not be seen as of equal importance. The sectoral composition of FDI plays a critical role in deriving FDI growth benefits which might make it a necessary precondition for FDI to promote economic growth, while other factors such as financial development, trade openness, human capital and infrastructure quality could be seen as sufficient preconditions for reaping FDI growth dividends. The paper's findings have important policy implications as Arab countries can turn to domestic policy solutions to direct FDI inflows to the dynamic sectors and focus not only on FDI quantity but also on FDI quality. Meanwhile, efforts should be made to reform and improve institutional quality, macroeconomic policies, and domestic financial markets.Keywords: FDI, Economic Growth, Arab CountriesJEL classification: F21, O40, O43(ProQuest: ... denotes formulae omitted.)1. INTRODUCTIONCapital is the cornerstone of any production process at both the micro and the macro-economy levels. Capital can be obtained through domestic sources as well as through foreign sources, which is mostly in the form of Foreign Direct Investment (FDI). FDI inflows have multifaceted features which make them preferable to other sources of capital. These features include filling savings-investment gaps, relaxing foreign exchange constraints, and consisting of a bundle which includes not only capital but also technology, knowledge, and marketing and managerial skills (Grossman and Helpman, 1992; Walz, 1997; Pradham, 2003).FDI has become the most stable and the largest component of capital flows to developing countries. As a result, FDI is considered an important element in the economic development process. Yet the role of FDI in the economic growth/ development process has for long been a topic of intense debate. To date, the empirical evidence of the effect of FDI on economic growth is not conclusive.While one stream of research has indicated a positive impact of FDI on economic growth, another stream reports otherwise. A third stream of research suggests that the effect of FDI on a host country's economy is dependent on the country's absorptive capacity in terms of its human capacity and the level of economic and financial development (Hermes and Lensink, 2004; Makki and Somwaru, 2004).FDI flows around the world have dramatically increased in the past three decades. World FDI flows rose from $54 billion in 1980 to $208 billion in 1990, then to $1,401 billion in 2000 before falling to $1,114 in 2009. Arab countries were not an exception to this trend. Total FDI inflows to Arab countries increased from a mere $502 million in 1970 to $1,288 million in 1990, then jumped to $6,056 million in 2000 before soaring to $47.6 and $79.2 billion in 2005 and 2009, respectively (UNCTAD). These trends reflect the increasing importance of FDI flows both for recipient and exporting countries.This paper aims at answering two main questions. First, did FDI inflows contribute to economic growth in Arab countries over the period 1970-2008? Second, can country-specific features and initial conditions explain cross-country variations in the growth benefits of FDI? Answers to these questions provide insights into how changes in economic and institutional conditions can affect FDI prospects for Arab countries, as well as inform policy responses for acquiring growth benefits from FDI in the future. …