Does Geopolitical Risk and Financial Development Matter for Economic Growth in MENA Countries?

• Autorzy: Hassen Soltani , Mohamed Bilel Triki , Mohamed Ghandri , Fouzi Tahar Abderzag
• Języki publikacji: EN

Abstrakty

EN

This study seeks to study the impact of financial development, foreign direct investment (FDI) and geopolitical tensions on economic growth for MENA countries. Geopolitical tensions are explored by the geopolitical variable risk index developed by Caldara and Iacoviello in 2016. We apply the Panel Vector Auto-regression (PVAR) model to a panel of MENA countries, the estimates show that the financial development factor has no impact on some countries but has an effect on others. This insignificant impact of financial development on economic growth is mainly linked to the quality of the financial systems in the MENA countries, which has remained underdeveloped, despite the improvement attempts that had been made by these countries. On the other hand, higher GPR results in higher economic vulnerability in the MENA countries, so the militaristic policies of countries and the influence of wars in the region brakes the development of specific economies and does not manage to fascinate foreign investors and convey economic growth. (original abstract)

Słowa kluczowe

EN

Economic growth; Fnancial development; Foreign investment; Panel model; Vector Autoregression Model (VAR)

PL

Wzrost gospodarczy; Rozwój finansowy; Inwestycje zagraniczne; Modele panelowe; Model wektorowej autoregresji

• Czasopismo: Journal of International Studies
• Rocznik: 2021
• Tom: 14
• Numer: nr 1
• Strony: 103--116

Twórcy

autor

Hassen Soltani

• University of Bisha, Bisha, Saudi Arabia

autor

Mohamed Bilel Triki

• University of Bisha, Bisha, Saudi Arabia; University of Tunis, Tunisia

autor

Mohamed Ghandri

• University of Bisha, Bisha, Saudi Arabia

autor

Fouzi Tahar Abderzag

• University of Bisha, Bisha, Saudi Arabia

Bibliografia

• Alesina, A., & Perotti, R. (1996). Political Instability, Income distribution and Investment. European Economic Review, 40, 1203-1228.
• Anwar, S., & Sun, S. (2011). Financial development, foreign investment and economic growth in Malaysia. Journal of Asian Economics, 22(4), 335-342.
• Arellano, M., & Bover, O.(1995). Another look at the instrumental-variable estimation of error-components models. Journal of Econometrics, 68, 29-52.
• Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data. Monte Carlo. Evidence and an Application to Employment Equations. Review of Economic Studies, 58(2), 277-97.
• Baltagi, B., H, Demetriades, H., & Law, H. (2009). Financial development and openness: Evidence from panel data. Journal of Development Economics, 89, 285-296.
• Barro, R. (2003). Determinants of economic growth in a panel of countries. Annals of Economics and Finance, 4, 231-274.
• Beck, T., & Levine, R. (2004). Stock markets, banks and growth: panel evidence. J. Bank. Finance, 28, 423-442.
• Benedictowa, A., & Roger, H. (2020). A financial accelerator in the business sector of a macro econometric model of a small open economy. Economic Systems, Elsevier, vol. 44(1).
• Bode, E., & Nunnenkamp, P. (2011). Does foreign direct investment promote regional development in developed countries? A Markov chain approach for US states. Review of World Economics, 147(2), 351-383.
• Brooks, D., Hasan, R., Lee, J.W, Son, H.H., & Zhuang, J. (2010).Closing development gaps: challenges and policy options, ADB Economics Working Paper Series. 209.
• Caldara, D., Iacoviello, M., & Markiewitz, A. (2018). Global and country-specific geopolitical risk uncertainty and stock return of fragile emerging economies. Borsa Istanbul Review, 20(3), 197-213.
• Chaido, D., & Emmanouil, S. (2014). Foreign Direct Investments, Exports, and Economic Growth in Croatia: A Time Series Analysis. Procedia Economics and Finance, 14, 181-190.
• Choong, C-K., Zulkornain, Y., & Siew, O .(2004). Foreign direct investment, economic growth, and financial sector development.ASEAN Economic Bulletin, 21, 278-289.
• Desbordes, R., & Shang-Jin, W. (2014). The Effects of Financial Development on Foreign Direct Investment. World Bank Group Policy Research. Working Paper 7065. Washington: World Bank Group.
• Durham, J., & Benson, J.(2004). Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth. European Economic Review. 48,285-306.
• Durusu-Ciftci, D., Ispir, M. S., & Yetkiner, H. (2017). Financial development and economic growth: Some theory and more evidence. Journal of Policy Modeling, 39(2), 290-306.
• Fauzel, S. (2016). Modeling the Relationship between FDI and Financial Development in Small Island Economies: A PVAR Approach. Theoretical Economics Letters. 6,367-75.
• Freytag, A., & Susanne, F. (2017). Sectoral linkages of financial services as channels of economic development-An input-output analysis of the Nigerian and Kenyan economies. Review of Development Finance. 7(1), 36-44
• Gaibulloev, K., & Sandler, T. (2008).Growth consequences of terrorism in Western Europe.Kyklos, 61(3), 411-424.
• Gorg, H., Greenaway, D .(2004). Much ado about nothing? Do domestic firms really benefit from foreign direct investment. World Bank Research Observer. 19, 171-198.
• Hausman, J.A. (1978). Specification tests in econometrics. Econometrica, 46, (6), 1251-1271.
• Hermes, N., & Robert, L. (2003). Foreign direct investment, financial development and economic growth.Journal of Development Studies. 40, 142-163.
• Mohamed Sghaier, I., & Zouheir, A. (2013). Foreign direct investment, financial development and economic growth: empirical evidence from North African countries. Journal of International and Global Economic Studies, 6(1), 1-13.
• Jung, W.(1986).Financial development and economic growth: international evidence. Economic Development and Cultural Change, 34, 333-346.
• King, R.G., & Levine, R. (1993). Finance and growth: Schumpeter might be right. Quart. J. Econ., 108, 717-738.
• Mansour,L., & Zeaiter, H. (2019).The role geopolitical risks on the Turkish economy opportunity or threat. The North American Journal of Economics and Finance, 50(C).
• Levin, A., Lin, C. F., & Chu, C. S. (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108(1), 1-24.
• Levine, R., & Renelt, D. (1992).A sensitivity analysis of cross-country growth regressions. Amerivan Economic Review, 82(4), 942-963.
• Mahmoodi, M., & Mahmoodi, E. (2016). Foreign direct investment, exports and economic growth: Evidence from two panels of developing countries. Economic Research Ekonomska Istrazivanja, 29, 938-49.
• Murdoch, J., & Sandler, T. (2002). Civil wars and economic growth: A regional comparison. Defence and Peace Economics, 13(6), 451-464.
• Al Nasser, O.M., & Xavier, G. G. 2009. Do well-functioning financial systems affect the FDI flows to Latin America? International Research Journal of Finance and Economics. 29: 60-75.
• Osei , M.J., & Jaebeom, K. (2020). Foreign direct investment and economic growth: Is more financial development better? Economic Modelling.154-161.
• Ranciere, R., Tornell, A., & Westermann, F. (2007).Systemic crises and growth. Quarterly Journal of Economics 1, 359-406.
• Roubini, N., &Sala-I-Martin, X. (1992).Financial repression and economic growth. Journal of Development Economics .39, 5-30.
• Sahin, S., & Ilhan, E. (2015). Financial development and FDI in Greece and neighboring countries: A panel data analysis. Procedia Economics and Finance, 24, 583-88
• Sala, I., &Martin, X. (1997). I just ran two million regressions. American Economic Review, 87(2), 178-83.
• Samy,N., & Samir,G. (2007). Stock markets, banks, and economic growth: Empirical evidence from the MENA region" Research in International Business and Finance 297-315.
• Solomon, E. (2011). Foreign Direct Investment, Host Country Factors and Economic Growth. Ensayos Revista de Economia, 30(1), 41-70.
• Soltani, H., & Ochi, A. (2012). Foreign Direct Investment (FDI) and Economic Growth: an approach in terms of cointegration for the case of Tunisia. Journal of Applied Finance & Banking, 2(4), 193-207.
• Soltani,H. (2013). Trade openness and economic growth: The case of Tunisia. International Journal of Advances in Management and Economics, 2(2), 24-32.
• Soybilgen, B., Kaya, H., & Dedeoglu, D. (2019). Evaluating the effect of geopolitical risks on the growth rates of emerging countries. Economics Bulletin, 39(1), 717-725.
• Triki, M.B., & Ben Maatoug, A. (2021). The gold market as a safe haven against the stock market uncertainty: evidence from geopolitical risk. Resources Policy, 70, March 2021, 101872.
• Yilmaz, B., & Marius, D. G. (2018). Foreign direct investment inflows and financial development in Central and Eastern European Union countries: A panel cointegration and causality. Int. J. Financial Stud., 6(2), 55.
• Zukarnain, Z. (2007). The causality relationship between financial development and foreign direct investment. Journal Kemanusiaan, 10, Disember 2007.
• Okon. K., Osundi. S., & Dibal. J. (2012). Bacterial contamination of operating theatre and other specialized care unit in a tertiary hospital in Northeastern Nigeria. African Journal of Microbiology Research 6(13):3092-3096
• Villegas-Sanchez, C. (2008). FDI spillovers and the role of local financial markets: Evidence from Mexico. European University Institute, Mimeo.
• Alesina, A., Sule, O., Nouriel, R., & Philip, S. (1996). Political instability and economic growth. Journal of Economic Growth, 1(2), 189-211.
• Beck, T., E. Feyen, A. Ize et F. Moizeszowic (2008). Benchmarking Financial Development. Policy Research Working Papers nº 4638 (Washington, DC : The World Bank).

Identyfikatory

DOI

10.14254/2071-8330.2021/14-1/7