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The Linear and Non-Linear Effects of External Debt on Economic Growth in MENA Countries: An Empirical Investigation

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  • Adel Necib

Abstract

Purpose: This paper is an attempt to analyze the effects of external debt on economic growth in 16 emerging MENA countries in the presence of non-linearity during the period between 1990 and 2016 (a period that included several devaluations. Design/Methodology/Approach: The empirical analysis is based on the ARDL method of cointegration (AutoRegressive Distributed Lag). Findings: We conclude that in the short run the estimated value of ECTt-1 is -0.163 assuming that the short run shocks of the previous period are equal to 16.3%. Debt has a positive and significant impact on the growth of MENA countries. Practical Implications: The results would be essential to reform the governance of public services to make them more efficient and truly equitable. This reform should place the user at the heart of the system, as beneficiary and regulator, and focus on making administrative services more efficient, by simplifying procedures and strengthening accountability. Originality/value: The analysis of the correlation between the main indicators of external debt and economic growth is adopted. In this context, the analysis focuses on several external debt indicators as described in the article making the proposed analysis original.

Suggested Citation

  • Adel Necib, 2023. "The Linear and Non-Linear Effects of External Debt on Economic Growth in MENA Countries: An Empirical Investigation," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 13(2), pages 3-29.
    • Handle: RePEc:ers:ijfirm:v:13:y:2023:i:2:p:3-29
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    More about this item

    Keywords

    External debt; Exchange rate; Economic growth; Non-linearity; Solvency; Sustainability.;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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