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MONEY, FDI AND ECONOMIC GROWTH IN MENA COUNTRIES.
Abstract:
The first chapter examines the link between FDI, trade, capital formation and economic growth in 12 MENA countries using panel analysis for yearly data between the period 2001 to 2017. Using the cointegration and Hausman test, our results indicate that, all the variables are stationary at first level, and the long-run relationship exists between our variables. A model of endogenous growth highlights that MENA countries favored FDI to trade, where trade has a negative relationship with economic growth. Capital formation and labor have a positive and significant relationship. We also, address the relation of education level, as we know that increase in Education level will enhance the adoption of foreign technology. The results were consistent with our initial model. Furthermore, we answered the question of whether FDI is a compliment or a substitute? Our results show that FDI has a negative relation with the stock market. In other words, FDI is a substitute not a compliment to the stock market. FDI is positively correlated with political stability, stock market, liquidity, saving, and GDP.
The second chapter explores the long-run demand for money and its stability for MENA countries for the period of 2002 to 2016 using annual data. By applying a panel cointegration approach, the result reveals evidence of cointegration between the variables in the long run. Therefore, an error correction (ECM) is applied to determine the factors that influence real money aggregate(M2). The result shows that export and import have positive and negative effect respectively, an increase in exporting will increase the value of the currency, and the opposite is true. Further, all the variables have a significant effect in the long run, while GDP affects the demand for money in the short run. The CUSUM test of paraments stability shows that the money demand function is mostly stable over the period. At the individual level, the results change from one county to another.
Keywords:
Money demand, exchange rate, Export, Import, FDI, Stock, Trade, Economic growth, Capital formation MENA Countries.