Investment criteria in theory and practice with special reference to the United Arab Republic

Abstract

It has been said that each economy has its own economic structure and problems. To the extent that this is true, generalizations on the economic structure and characteristics of less developed but developing countries seeking economic growth will lead us astray.In this study however, we will only focus attention on the statement of investment criteria. This is because the selection of an investment project, programme or a plan involves decisions both of non -economic and economic character. Although we cannot ignore the decisive effects of the former group of decisions, in this study we will only concentrate on the economic considerations.Among the most important decisions which have to be made when preparing a development plan are those concerning the size of the investment programme, the distribution of investment between the public and the private sector, the allocation of investment among the various sectors of the economy and within each sector, the location of industries and the technical form of investment.In brief, given the capital available (including foreign exchange), the object of this study is to explore the degree to which economic theory can be of help to the development planner faced with the problem of investment choices.Firstly, a theoretical study is made to cover some of the main investment rules and priority systems that have found their way into the literature of development planning. Our discussion of the subject lies into two parts. While part one of this study critically examines the;uarterly Journal of Economics investment criteria discussion, part two is devoted for the discussion of some of the priority systems thus far developed by National Planning Institutes.Secondly, in the light of what have been discussed in the first two parts of this study, in part three we will critically examine the U.Î.R. recent practice in development planning with special reference to the question of investment priorities.