CAPITAL ACCOUNT, INSTITUTIONAL QUALITY, AND ECONOMIC GROWTH IN MENA COUNTRIES: A GMM APPROACH

2016 ◽  
Vol 11 (04) ◽  
pp. 1650016
Author(s):  
MOHAMED ILYES GRITLI ◽  
FATMA MARRAKCHI CHARFI
Keyword(s):  
Economic Growth ◽  
Negative Impact ◽  
Positive Impact ◽  
Empirical Studies ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Capital Account ◽  
Financial Openness ◽  
Capital Account Liberalization ◽  
Mena Countries

Despite the diversity of theoretical and empirical studies, the question of capital account–economic growth relationship remains a controversial issue. The aim of the paper is to complete the existing evidence focusing on Middle East and North Africa (MENA) countries, while taking into account the institutional quality. In this context, various estimates were made by generalized method of moments (GMM) over the period of 1986–2012 for 11 countries. The results show that corruption and democratic accountability have a significant and negative impact on economic growth if capital account liberalization is enacted. However, the interaction term of bureaucracy quality and financial openness has a significant and positive impact on economic growth. These findings therefore show that the benefits of capital account liberalization are not unconditional, but are likely to depend upon the environment in which the liberalization occurs. Our paper contributes to the recent policy debates on the merits and demerits of capital account liberalization.

scholarly journals Remittances Impact on Economic Growth, Domestic Savings and Domestic Capital at the Presence of ODA and FDI in Selected MENA Countries

2016 ◽  
Vol 3 (2) ◽  
pp. 26 ◽  
Author(s):  
Mahmoud Mohammed Sabra
Keyword(s):  
Economic Growth ◽  
Negative Impact ◽  
Positive Impact ◽  
Government Expenditure ◽  
Host Countries ◽  
Mena Countries ◽  
Domestic Capital ◽  
Domestic Savings ◽  
Seeking Behavior ◽  
The Impact

<p>This article investigates the impact of remittances on economic growth, investment and domestic savings in selected MENA labor exporting countries. The estimations have been done in the presence of other international capital inflow, which are foreign aid and foreign direct investment. A multiple equations model estimated simultaneously using different techniques. We found a positive impact of remittances on both growth and investment, meanwhile a negative impact on domestic savings. Aid impacts negatively on both growth and savings where it finance consumption instead of investment and enhance rent seeking behavior. Government expenditure and FDI are important source of growth. We recommended that policies for encouraging final use of productive investment of remittances. In addition, enhancing more project of migrant in home country that may facilitate their trade with host countries. Finally, more efficient allocation of aid is requires, and attracting more FDI.</p>

Does Foreign Capital Enhance Economic Growth In Emerging Countries: Flow Decomposition Approach?

2014 ◽  
Vol 31 (1) ◽  
pp. 221
Author(s):  
Imene Debbiche ◽  
Oubeid Rahmouni
Keyword(s):  
Economic Growth ◽  
Empirical Studies ◽  
Dynamic Panel Data ◽  
Capital Inflows ◽  
Financial Openness ◽  
Capital Account Liberalization ◽  
Decomposition Approach ◽  
Total Capital ◽  
The Impact ◽  
Flow Decomposition

Unlike trade liberalization, the impact of financial openness on growth is still mitigated. In fact, empirical studies focusing on effects of capital account liberalization are inconclusive, which could be due to the sample chosen, to the liberalization index or to the fact that studies take account of capital inflows as a whole which can mask substantial differences between different flow effects.Our purpose in this paper is on one hand to re-examine the impact of capital inflows on growth by dividing these inflows into portfolio equity flows, foreign direct investment flows and debt flows and on the other hand to study if the composition of capital inflows has an importance. This work will be done by estimating a standard growth model using dynamic panel data approach.Our main findings are first, that total capital inflows improve economic growth and so does every kind of flow taken apart; which supports the neoclassical wisdom and second, that capital inflows composition isn't important; which indicates that all inflows are substitutes in the short term.

Financial liberalization and economic growth

2015 ◽  
Vol 42 (2) ◽  
pp. 207-223 ◽  
Author(s):  
Thiago Henrique Carneiro Rios Lopes ◽  
Cleiton Silva de Jesus
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Fixed Effects ◽  
Financial Integration ◽  
Generalized Method Of Moments ◽  
Capital Account ◽  
Capital Account Liberalization ◽  
Content Type ◽  
Positive Effect ◽  
Interactive Variable

Purpose – The purpose of this paper is to ascertain whether countries benefit from capital account liberalization in more democratic contexts. Design/methodology/approach – The authors used the follow methodologies in this paper: Pooled OLS, panel data with fixed effects and generalized method of moments. The empirical exercises were conducted for both a large sample and a smaller group of developing countries. Given the characteristics of the variables used in the standard model, the main conclusions were obtained from an estimation that took into account the presence of fixed effects and endogeneity. Findings – Considering a sample of 77 countries, the authors were able to ascertain that capital account openness has a positive effect on economic growth only in highly democratic countries. When the same estimates are carried out with a more restricted sample, composed of 50 developing countries, the results are more pessimistic. In this case, capital account openness has a negative and significant effect, although being more democratic is not sufficient in itself to reap the benefits of financial integration. Research limitations/implications – The results obtained in this paper are limited to the number of observations and the period analysed. Furthermore, the conclusions need to be confirmed by a test of robustness, which should be conducted in future works; such works could make use of other democracy indicators and other instruments. Originality/value – The innovation of the work, in comparison to those the authors consulted, resides in its testing, through an interactive variable, whether the effect of capital openness on economic growth depends on level of democracy.

Effectiveness of bilateral and multilateral concessional debts on economic growth in Africa

2019 ◽  
Vol 15 (2) ◽  
pp. 344-361 ◽  
Author(s):  
Hillary Chijindu Ezeaku ◽  
Obiamaka P. Egbo ◽  
Ifeoma Nwakoby ◽  
Josaphat U.J. Onwumere
Keyword(s):  
Economic Growth ◽  
Negative Impact ◽  
Positive Impact ◽  
Empirical Studies ◽  
Relative Effectiveness ◽  
Equilibrium Path ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Long Run Equilibrium

Purpose The purpose of this paper is to assess the relative effectiveness of bilateral and multilateral concessional debts on economic growth in 32 sub-Saharan African (SSA) countries over the period 1985–2016. Design/methodology/approach The recently developed dynamic panel autoregressive distributed lag models which comprise three different estimators, the mean group, pooled mean group (PMG) estimator and dynamic fixed effect, were applied to estimate the model. Following these estimators, the Hausman test was employed to determine the efficient and consistent estimator. Findings The results showed that bilateral concessional debts had a negative impact on growth. From the findings, a 1 percent increase in bilateral concessional debts induced economic growth to decline by 38.1 percent points in the short run, and by 7.1 percent points in the long run; convergence to long-run equilibrium adjusted at the speed of 90 percent on an annual basis. Multilateral concessional debts were found to have a positive impact on growth both in the short and long run. The coefficient of the error term was negatively signed and indicates that deviations from the long-run equilibrium path were being corrected at the speed of 89.4 percent annually. Originality/value To the authors’ best knowledge, empirical studies that specifically seek to examine how bilateral and multilateral concessional debts impacted on growth are yet to attract the attention of researchers. As a result, this study will complement related extant growth studies, especially in the case of SSA.

scholarly journals Empirical Evidence Regarding the Impact of Economic Growth and Inflation on Economic Sentiment and Household Consumption

2021 ◽  
Vol 14 (7) ◽  
pp. 336
Author(s):  
Larissa Batrancea
Keyword(s):  
Economic Growth ◽  
Fixed Effects ◽  
Negative Impact ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Household Consumption ◽  
Global Market ◽  
Policy Implications ◽  
The European Union ◽  
The Impact

The dynamics of the interconnected global market and consumption behavior has recently changed considerably. Using a sample of 28 nations within the European Union, the study examined the degree to which economic growth and inflation impacted economic sentiment and household consumption during the time frame of December 2019 up to October 2020. The results estimated via panel generalized method of moments and panel least squares (with cross-section weights, time fixed effects) showed that economic sentiment and household consumption were significantly shaped by the proxies of economic growth and inflation. Moreover, in the case of economic sentiment, the negative impact of inflation was much stronger than the positive impact of economic growth. The reverse applied in the case of household consumption. The study draws policy implications regarding the strategies that public authorities, companies, and individual consumers could apply for stimulating national economies amid challenging times.

Economic Growth Determinants in South-East European Countries: A System Generalized Method of Moments Approach

2021 ◽  
pp. 088832542110263
Author(s):  
Slobodan Lakić ◽  
Jasmina Ćetković ◽  
Bojan Pejović ◽  
Miloš Žarković ◽  
Miloš Knežević
Keyword(s):  
Economic Growth ◽  
Method Of Moments ◽  
Negative Impact ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Capital Formation ◽  
Fixed Capital ◽  
European Countries ◽  
East European ◽  
Fixed Capital Formation

Economic growth is a key point of macroeconomic policy and is the subject of constant attention and debate by professional public and policy makers. Theoretical and empirical research indicates differences in the level and direction of determinants’ influence on the growth rate. The main goal of our article is to construct a model of economic growth determinants in South-East European countries. We used an unbalanced panel of 12 selected SEE countries over the period 2006–2019. Our empirical findings have shown that the most robust results can be obtained using a two-step generalized method of moments (GMM) model with dummy variable. In our dynamic model, we found that trade openness and gross fixed capital formation have a positive impact on economic growth, while government expenditures negatively determine economic growth. Gross fixed capital formation has the greatest positive impact on economic growth, while government expenditure has the greatest negative impact.

scholarly journals Health Expenditure, CO2 Emissions, and Economic Growth: China vs. India

2020 ◽  
Author(s):  
Sampson Agyapong Atuahene ◽  
Kong Yusheng ◽  
Geoffrey Bentum-Micah
Keyword(s):  
Economic Growth ◽  
Co2 Emissions ◽  
Health Expenditure ◽  
Negative Impact ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Health Spending ◽  
Dynamic Panel Data ◽  
Current Debate ◽  
The Impact

Researchers&rsquo; attention has been turned on Health expenditure, Carbon emissions, and economic growth as they play a focal role in the current debate on environmental protection and sustainable development. Our paper endeavors to investigate the impact of economic growth and CO2 emissions on Health expenditure for two main countries in Asia (China and India) using a dynamic panel data model estimated employing the Generalized Method of Moments (GMM) for the period 1960&ndash;2019. Our empirical results show that there is a significant relationship between health expenditure, CO2 emissions, and economic growth. The empirical evidence indicates a significant positive impact of CO2 emissions on health expenditure whiles economic growth has a negative impact on health expenditure for both countries for the period under study. The population growth rate has transposed effect on India's health spending; on the other hand, its impact on China&rsquo;s health spending is significantly positive. The strong observable correlation between health expenditure and economic growth is crucial for economic development.

scholarly journals Remittances, Governance and Economic Growth: Empirical Evidence from MENA Region

2019 ◽  
Vol 11 (8) ◽  
pp. 1 ◽  
Author(s):  
Wadad Saad ◽  
Hassan Ayoub
Keyword(s):  
Economic Growth ◽  
World Bank ◽  
Negative Impact ◽  
Positive Impact ◽  
Annual Data ◽  
Mena Region ◽  
Mena Countries ◽  
Distributed Lag ◽  
The World Bank ◽  
The World

In this study we examine the effects of remittances and governance on economic growth in ten MENA countries. We choose these countries because they have relatively stable political situations. Using annual data from the World Bank over the period 2002-2017, we estimate panel autoregressive distributed lag (ARDL) models due to the existence of mixed levels of integration among series involved in this study. Control variables such as gross capital formation, consumption per capita and openness among others are integrated in these models. A governance composite is computed using the 6 governance indicators from the world bank. These indicators are used individually in different ARDL models with their interactions with the remittances to explore their impact on economic growth. The findings indicate a negative impact of the remittance on economic growth in the quasi-totality of the models. However, while governance composite shows a positive impact on economic growth, taking into consideration the dimensions of governance leads to conflicting results.

Re-examining the government expenditure–growth nexus in ECOWAS countries

2020 ◽  
Vol 36 (4) ◽  
pp. 277-301 ◽  
Author(s):  
Olumide Olusegun Olaoye ◽  
Monica Orisadare ◽  
Ukafor Ukafor Okorie ◽  
Ezekiel Abanikanda
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Institutional Environment ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Government Expenditure ◽  
Institutional Quality ◽  
Empirical Modeling ◽  
African Countries ◽  
Content Type

PurposeThe purpose of this study is to investigate the effect of government expenditure on economic growth in 15 Economic Community of West African States (ECOWAS) countries over the period of 2005–2017. More precisely, this paper investigates whether institutional environment influences the effect of government spending on economic growth.Design/methodology/approachThis study adopts the generalized method of moments-system method of estimation to address the problem of dynamic endogeneity inherent in the relationship. Similarly, unlike previous studies which assume that the disturbances of a panel model are cross-sectionally independent, we account for cross-section dependency and cross-country heterogeneity inherent in empirical modeling using Driscoll and Kraay's nonparametric covariance matrix estimator, adjusted for use with both balanced and unbalanced panels along with Monte Carlo simulations.FindingsThe authors find that though, government spending has a positive impact on economic growth but the level of institutional quality adversely affect that positive impact. This suggests that the institutional environment in ECOWAS countries is a drag and not a push factor for government fiscal operations and/policies. Thus, the results provide empirical evidence that there is a conditional relationship between government spending and economic growth in African countries. That is, the effect of government spending on economic growth is dependent on the quality of institutions. Lastly, these findings suggest that in order for government spending to contribute to economic growth, African countries must develop a strong institutional environment.Originality/valueUnlike previous time series studies for African countries which concentrated on the two variable case, we include institutional quality as a third variable to underline the potential importance of institutional quality for economic growth in ECOWAS countries.

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