Growth-finance nexus in oil abundant GCC countries of MENA region

Haque, Mohammad Imdadul; Faruk, Bashir Umar; Tausif, Mohammad Rumzi

doi:10.1080/23322039.2022.2087646

Cited by 7 publications

(2 citation statements)

References 25 publications

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“…Recent literature on the finance-growth nexus underscores the significance of examining this relationship through the lens of endogenous growth theory, as advocated by Bist and Bista (2018), Guru and Yadav (2019), Haque et al (2022), Mengesha andBerde (2023), andPradhan et al (2017). In our model, the endogenous variable is economic growth, calculated as the natural logarithm of a nation's GDP per capita at time t. Per capita income, determined by dividing a country's gross domestic product by its population (Beylik et al 2022), serves as a crucial economic metric for assessing a country's level of development.…”

Section: Methodsmentioning

confidence: 99%

Modeling Finance–Growth Nexus in MENA Region Economies: A Panel Data Analysis

Kamal,

AboElsoud,

Abdella

2023

Economies

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The primary objective of this paper is to examine the relationship between finance and economic growth in a cohort of 16 economies within the MENA region spanning a four-decade period from 1980 to 2021. This study employs panel unit root and panel co-integration analyses to investigate this long-term nexus. The fully modified and dynamic Ordinary Least Squares (OLS) approaches are utilized to estimate the long-run coefficients. The findings underscore the existence of cross-sectional interdependence among these nations. Furthermore, Pedroni’s panel co-integration research robustly supports the idea of a long-term co-integrating relationship between financial development and economic growth. Our long-run panel estimations reveal a positive and statistically significant impact of financial development on GDP per capita income growth. In addition to this broad analysis, this paper conducts a detailed time-series examination focused on a specific country to validate the robustness of the results. These findings further substantiate the favorable influence of financial development on income growth in the majority of MENA nations. Notably, private sector participation in these economies is found to be alarmingly low. As a result, a significant policy implication of this study underscores the urgent need for policymakers to prioritize measures conducive to private sector expansion. Moreover, enhancing financial inclusion, addressing the crowd-out effect, and tackling non-performing loans are critical areas requiring attention within the MENA region. Furthermore, our research highlights the potential benefits of developing stock markets as part of an optimal strategy to enhance both economic and income growth rates. In conclusion, this study contributes valuable insights into the finance–growth nexus in the MENA region, emphasizing the importance of financial development as a driver of economic prosperity and the need for targeted policy initiatives to support private sector growth and financial stability.

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Section: Methodsmentioning

confidence: 99%

Modeling Finance–Growth Nexus in MENA Region Economies: A Panel Data Analysis

Kamal,

AboElsoud,

Abdella

2023

Economies

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“…Another similar study was conducted by [30] on the relationship between financial development and the economic growth of the Gulf Cooperation Council (GCC) countries. The study employed a panel fully modified and dynamic estimation approach, where the data were subjected to the Pedroni test for co-integration and the Granger causality test.…”

Section: Financial Development and Economic Growth Nexusmentioning

confidence: 99%

A Panel Analysis on the Nexus between Financial Development, Oil Production, and Trade-Openness and Its Impact on Sustainable Economic Growth: Evidence from Selected Arab Economies

Deryag,

Khalifa

2024

Sustainability

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In accordance with the United Nations Sustainable Development Goals agenda for decent and sustainable economic growth highlighted in the UNSDGs-8, several economies over the years have been on the quest for drivers for decent and sustainable economic growth, of which the Arab bloc is no exception. To this end, the present study draws strength from the classical growth model while exploring the dynamic nexus between oil production and economic growth while accounting for other key growth drivers like gross capital formulation accumulation, labour, trade openness, and financial development for a balanced panel of selected Arab economies. To operationalise the study objectives, the present study leverages second-generational panel econometric approaches. The econometrics techniques applied circumvent the cross-sectional dependency and slope heterogeneity in the sampled bloc. For co-integration analysis, the Westerlund’s panel co-integration test affirms a long-run equilibrium relationship between the study’s outlined variables. Furthermore, for long-run estimates, the present study leverages the common correlated effects mean group (CCEMG) methodology and the augmented mean group (AMG) method for robustness and soundness of the results and coefficients. The present study corroborates the trade-induced growth hypothesis in the entire panel at a p < 0.001 statistical level, which resonates with the mercantilism school of thought. Additionally, the present study also affirms the Solow–Swan hypothesis, where gross capital formation accumulation and labour drive economic growth. Interestingly, the panel bloc shows that oil production is a key driver to the nation’s economic growth, at a p < 0.05 statistical level. However, from a policy standpoint, there are policy suggestions for diversification of the Arab economies to move from a mono-economy dependent on oil production to other sectors like service, industry, and manufacturing, which require labour, capital accumulation, and more. Further policy caveats are outlined in the concluding section.

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