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The debate on the effect of democracy on economic growth has been comprehensively growing since 1980s in theoretical and empirical literature. The existing literature provides conflicting views of this relationship. For this reason, the aim of this paper is therefore to empirically investigate this relationship in 17 MENA countries over the period 1983-2012. We explore this relationship by using fixed (FE)/random (RE) effects and generalized method of moments (GMM) system approaches. We show that a priori the sign of the effect is ambiguous. The major empirical is that democracy, measured by Institutionalized Democracy Score, Institutionalized Autocracy Score, Competitiveness of Executive Recruitment, Openness of Executive Recruitment and Executive Constraints have a robust and negative impact on growth in MENA countries.

The aim of this paper is to determine the correlation between capital account liberalization and economic growth. We are particularly interested in a qualitative indicator to measure this process. Our empirical study was conducted on a sample of 60 developed and developing countries covering the period 1984 to 2007. Referring to the dynamic panel model, our econometric results reveal a direct correlation between the capital account liberalization and economic growth which can be either positive or negative due to the sample selection and the study period. This leads us to predict the capital account opening is a sine qua non for initiating economic growth.

This paper provides a comprehensive review of the literature on the dual effect of financial liberalization over more than three decades, starting from the independent contributions of Ronald I. McKinnon and Edwards S. Shaw on this topic. In this regard, the paper revisits the effects of financial liberalization and governance on growth. Moreover, it presents a summary of current research in this area, covering the conclusions of the endogenous growth models, issues on volatility and the relationship between financial liberalization, institutions, governance and economic growth. To study data of 54 countries from 1985 to 2010 and because the nexus between financial liberalization and economic growth is nonlinear and depends on specific national factors especially institutions quality and governance, the Panel Smooth Transition Regression (PSTR) model is used. The main result of this study shows that a better contribution of financial liberalization to economic growth requires the interrelationship and the complementarity between financial liberalization and governance. Overall, regardless of the level of liberalization, output income is always higher with better governance and institutions.

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