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Manufacturing and Economic Growth in Selected MENA Countries: A Kaldorian Approach

Author

Listed:
  • Nisreen Mousa

    (Beirut Arab University)

  • Abdallah Nassereddine

    (Beirut Arab University)

Abstract

The empirical literature on Kaldor’s laws includes very few studies applied to the Middle East and North Africa. Those that examine the role of manufacturing in the growth process in the context of the region are almost nonexistent. This paper fills the gap and investigates the role of manufacturing growth in selected Middle Eastern and North African countries using panel data analysis from 2007 to 2019. The study tests Kaldor’s three laws to identify the role of manufacturing in economic growth. The first law of Kaldor indicates that the growth rate of the manufacturing sector is strongly and positively related to the growth rate of the economy. The second law of Kaldor, also known as the Kaldor-Verdoorn law, shows the relationship between productivity in manufacturing and manufacturing output. The third law states that a rise in overall productivity in an economy has a positive effect on output in manufacturing. Using data from the World Development Indicators, an empirical analysis using the system generalized method of moments is performed in a sample of 13 Middle Eastern and North African countries. The results provide strong support for the three laws in the Middle East and North Africa, demonstrating that output growth in the manufacturing sector is critical for generating economic growth and increasing productivity.

Suggested Citation

  • Nisreen Mousa & Abdallah Nassereddine, 2024. "Manufacturing and Economic Growth in Selected MENA Countries: A Kaldorian Approach," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 30(3), pages 327-341, August.
    • Handle: RePEc:kap:iaecre:v:30:y:2024:i:3:d:10.1007_s11294-024-09910-4
    DOI: 10.1007/s11294-024-09910-4
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    Keywords

    Kaldor’s Laws; Economic Growth; Manufacturing Value Added; Productivity; MENA;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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