We argue that foreign direct investment (FDI) in the Arab world is no source of economic growth as, for example, it is for the East Asian Tigers. This is particularly noteworthy for the diversified economies, which had the highest FDI shares among developing areas at the end of the 1970s, before the region lost ground to other developing areas. The result is less surprising for the oil countries, which not only have the least diversified economies and thus the least absorptive capacity, but also the lowest FDI shares. What are the causes of these observations? We argue that the outward orientation and democratization deficit to other developing areas have prevented the attraction of enough FDI that could have been translated into growth impulses in the Arab world.