Inter Arab financial flows

Flows of capital between countries, may take one of a number of forms. They may be in the form of private transfers, direct private investments or official grants and loans.;The Arab region is made up of a few countries who have a strong capital balance and numerous countries who have a capital shortage. The flow of capital within the region has remained very modest. Moreover, these resource flows have not generally represented action taken within a well defined framework for promoting regional cooperation and integration. Nor were they the outcome of economic considerations and profit calculation.;Two economic models of the financial flows from Arab oil countries to non-oil Arab countries were developed. These models identify a number of different factors which have determined the flow of financial resources. The estimation of these models lead to three main findings: first, political factors are very important, even dominant, in aid decision; second, there is a middle income bias, meaning higher income countries get more financial aid per capita than low income countries; third, there is also a small country bias meaning countries with small population receive more aid per capita than large countries.;The argument advanced in favor of investing within the Arab region and for fostering closer financial cooperation among its members concern the advantage associated with regional cooperation and integration.;In my study I am primarily interested in looking at flows of capital that originate from direct government transfers and state financial funds. The scope of my study is narrowly focused on that which flows within the Arab countries.