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Abstract
The efficiency of public investment is quite a relevant and timely subject in Arab countries, because the public sector invests heavily, and because all resources for development are becoming increasingly scarce. In these countries, public investment is high both as a proportion of total investment and as a percentage of gross domestic product (GDP). This means that in the long run the growth of output, the standard of living, and welfare crucially depend on the efficiency of public investment. As Arab countries have adjusted to the reduced inflows of foreign resources that started in the early 1980s, the tendency has been to reduce public investment, meaning that maintaining any semblance of past growth rates depends on increasing the efficiency of the investment that remains.
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