Microsoft Word Hoekman Sekkat Arab ri042010

 
Figure 7. Outward FDI Performance and Inward FDI Potential Indexes 
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Countries not investing enough abroad Countries to invest in
4. Towards Deeper Integration of Markets
Reducing market segmentation for goods, services and factor markets can help improve 
productivity performance and expand overall employment by encouraging new entry and 
investment, especially SMEs. Many countries in the region are small or relatively small; 
and, as noted, there are very large imbalances in terms of demand-supply of labor and 
capital. Regional integration of markets can help narrow these imbalances and allow 
better exploitation of the opportunities offered by world markets. The challenge then is to 
identify and address the major sources of market segmentation through cooperative 

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mechanisms. This need not involve moving towards a formal common market. What it 
does (must) involve is a concerted effort to deal with policies that keep trade and 
operating costs high and that impede entry by foreign investors and producers. What 
follows discusses a number of the key areas for policy initiatives.