Abstract

The study amid at estimated the role FDI on economic development in the Arab countries during the period 1995- 2013, The study used panel data approach in 17 countries: (Jordan, United Arab Emirates, Bahrain, Tunisia, Algeria, Saudi Arabia, Sudan, Oman, Qatar, Kuwait, Lebanon, Egypt, Djibouti, Mauritania, Morocco, Yemen and Palestine), by applying three models are: Pooled Regression Model (PRM), Fixed Effects Model (FEM), Random Effects Model (REM), and the preference among the previous models were used two tests: Lagrange Multiplier test (LM) to choose between pooled regression model and model effects model, and Haussman test to choose between the fixed effects model and random effects model. The study found the most important results, including: the FDI has a negative effect on economic development in the Arab countries during the period 1995 to 2013. The study also found that imports and exports and gross capital formation has a positive effect on economic development in the Arab countries during the period 1995- 2013, The study recommended to reduce the wholly foreign-owned projects ownership of, and encourage the establishment of joint projects that help local investor to impose control over the foreign investor.