ABSTRACT
This chapter shows that the European Union (EU) offers a useful model for the future economic and political evolution of the Arab countries. It provides a brief historical perspective on the evolution of the European Union and highlights its most important accomplishments. The chapter reviews the key elements of economic policy that have come to be accepted within the EU as being conducive to balanced, sustainable growth, with particular reference to the needs of developing countries. It examines the impact of foreign direct investment (FDI), with particular reference to growth, employment, exports and the capital account. FDI growth in Arab countries could thus be expected to make a major contribution to mitigating the affects of the rapid expansion of the working age population on unemployment rates. Arab countries would likely benefit from these processes as well if they gave a major push to regional integration.
