Institutional quality and trade openness-economic growth nexus in the Arab Maghreb Union

Boubechtoula, Younes and Ariffin, Muhammad Irwan and Duasa, Jarita (2024) Institutional quality and trade openness-economic growth nexus in the Arab Maghreb Union. International Journal of Business and Technology Management, 6 (S4). pp. 155-175. E-ISSN 2682-7646

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Abstract

The continued failures to become high-income countries of the Arab Maghreb Union (AMU) countries have led to a renewed focus on the fundamental determinants of economic growth and the economic impact of the quality of institutional factors in these countries. This study examines the direct effects of trade openness and institutional quality and the moderating effect of institutional quality on trade openness-economic growth nexus of AMU countries from 1996 to 2022. The institutional quality is proxied by the overall factors’ score of the Worldwide Governance Indicators (WGI). The study employs panel data estimation models where the Hausman test is used for model specification between the two techniques: the fixed effect model (FEM) and the random effect model (REM). The study’s findings reveal that trade openness has a significant positive impact on AMU’s economic growth. In contrast, institutional quality does not directly affect economic growth, implying that institutions in AMU countries are underdeveloped. More importantly, the marginal effect of trade openness is positively and significantly associated with growth for all levels of institutional quality, implying that institutional quality matters for trade openness-growth nexus in AMU economies. The results imply that inflation and labor force significantly and positively affect economic growth. According to the results, the human capital index has not impacted the economic growth of the sampled countries as expected. Instead, the study finds that the human capital index has adversely affected economic growth. Finally, the relationship between trade openness and GDP growth is highly dependent on the institutional quality of AMU nations. Thus, to foster economic growth in AMU countries, the findings suggest a focused strategy to improve institutional quality.

Item Type:	Article (Journal)
Uncontrolled Keywords:	Trade Openness, Institutional Quality, Econometrics, Economic Growth, Arab Maghreb Union
Subjects:	H Social Sciences > HC Economic History and Conditions > HC94 By region or country H Social Sciences > HD Industries. Land use. Labor > HD72 Economic growth, development, planning H Social Sciences > HD Industries. Land use. Labor > HD75.6 Economic development. Environmental aspects H Social Sciences > HF Commerce > HF1021 Commercial geography. Economic geography J Political Science > JF Political institutions (General) > JF1338 Public administration
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Muhammad Irwan Ariffin
Date Deposited:	29 Nov 2024 16:31
Last Modified:	29 Nov 2024 16:32
URI:	http://irep.iium.edu.my/id/eprint/116166

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