Abstract
The research aims to explain the relationship between investment activity in capitals market and economic growth rate in selected Arab countries. This was done by using method of least squares two stages to test and determine the direction of the relationship between two variables. The effects have shown that causative relationship of directions between investment activity in capitals market and economic growth by using many tools as financial and monetary policies, inflation rate, interest rate, exchange rate, gross domestic product, according to effect testing .The causative one concludes that changes in economic growth may participate to explain the investment activity of capitals markets. It also changes the investment activity in capitals market and participates to explain the economic growth. For this reason, it is expected that investment activity in capitals market in Arab countries (1982 - 2008) with opening the expected capitals market and local capitals. The resumption of expected capitals market, reactivity of local capitals to invest financially inside, increasing the foreign investments have the essential role in economic growth. .
