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Capital Account, Institutional Quality, And Economic Growth In Mena Countries: A Gmm Approach

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  • MOHAMED ILYES GRITLI

    (University of Tunis El Manar, Faculty of Economic Sciences and Management of Tunis International and Regional Integration Laboratory, 2092 Tunis, Tunisia†University of Pau (UPPA), CATT, 64016 Pau, France)

  • FATMA MARRAKCHI CHARFI

    (University of Tunis El Manar, Faculty of Economic Sciences and Management of Tunis International and Regional Integration Laboratory, 2092 Tunis, Tunisia)

Abstract

Despite the diversity of theoretical and empirical studies, the question of capital account–economic growth relationship remains a controversial issue. The aim of the paper is to complete the existing evidence focusing on Middle East and North Africa (MENA) countries, while taking into account the institutional quality. In this context, various estimates were made by generalized method of moments (GMM) over the period of 1986–2012 for 11 countries. The results show that corruption and democratic accountability have a significant and negative impact on economic growth if capital account liberalization is enacted. However, the interaction term of bureaucracy quality and financial openness has a significant and positive impact on economic growth. These findings therefore show that the benefits of capital account liberalization are not unconditional, but are likely to depend upon the environment in which the liberalization occurs. Our paper contributes to the recent policy debates on the merits and demerits of capital account liberalization.

Suggested Citation

  • Mohamed Ilyes Gritli & Fatma Marrakchi Charfi, 2016. "Capital Account, Institutional Quality, And Economic Growth In Mena Countries: A Gmm Approach," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 11(04), pages 1-23, December.
    • Handle: RePEc:wsi:afexxx:v:11:y:2016:i:04:n:s2010495216500160
    DOI: 10.1142/S2010495216500160
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    1. Rihab Bousnina & Foued Badr Gabsi, 2022. "Current Account Balance and Financial Development in MENA Countries: The Role of Institutions," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(1), pages 109-142, March.

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