Toward a sustainable growth path in Arab economies: an extension of classical growth model

Abstract Background/Objectives Many economies are on the trajectory of alternative growth drivers other than conventional capital and labor. Access to credit facilities is a pertinent indicator of economic growth. In line with the United Nations Sustainable Development Goals (UNSDGs-8) agenda, the n...

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Main Authors: Amjad Taha, Mucahit Aydin, Taiwo Temitope Lasisi, Festus Victor Bekun, Narayan Sethi
Format: Article
Language:English
Published: SpringerOpen 2023-01-01
Series:Financial Innovation
Subjects:
Online Access:https://doi.org/10.1186/s40854-022-00426-6
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author Amjad Taha
Mucahit Aydin
Taiwo Temitope Lasisi
Festus Victor Bekun
Narayan Sethi
author_facet Amjad Taha
Mucahit Aydin
Taiwo Temitope Lasisi
Festus Victor Bekun
Narayan Sethi
author_sort Amjad Taha
collection DOAJ
description Abstract Background/Objectives Many economies are on the trajectory of alternative growth drivers other than conventional capital and labor. Access to credit facilities is a pertinent indicator of economic growth. In line with the United Nations Sustainable Development Goals (UNSDGs-8) agenda, the national goal for sustainable development for most economies and Arab economies is no exception. Therefore, the current study adopts a traditional growth model by exploring the relationship between gross domestic product (GDP) per capita, credit for private sectors, ratio of exports, real GDP, and per labor force participants for selected Arab economies annually from 2001 to 2020. Research design This study leverages the Fourier Kwiatkowski–Phillips–Schmidt–Shin (KPSS) unit root test and second-generation panel econometrics as estimation techniques, such as Westerlund and Edgerton panel cointegration test, and the use of two estimators, namely the augmented mean group (AMG) and common correlated error mean group (CCEMG), to obtain robust results. Findings Empirical findings from Westerlund and Edgerton panel cointegration tests validate the long-run equilibrium relationship among the outlined variables. Further empirical results indicate that the share of exports is negatively significant with economic growth in countries such as Kuwait, Lebanon, Tunisia, and Jordan. Additionally, savings and labor force participation have a positive relationship with economic growth in individual countries such as Algeria and Bahrain. As per the panel, there is no significant relationship between labor force participation and economic growth. This indicates that the skilled labor force enhanced economic growth. Conclusions These findings come with inherent far-reaching policy suggestions for economies and panels. Further details on country-specific policy actions are presented in the concluding section. Graphical Abstract
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spelling doaj.art-45f83837a17645879dadd1fe51aeed522023-01-15T12:19:19ZengSpringerOpenFinancial Innovation2199-47302023-01-019112410.1186/s40854-022-00426-6Toward a sustainable growth path in Arab economies: an extension of classical growth modelAmjad Taha0Mucahit Aydin1Taiwo Temitope Lasisi2Festus Victor Bekun3Narayan Sethi4Department of Banking and Finance, Eastern Mediterranean UniversityDepartment of Econometrics, Faculty of Political Sciences, Sakarya UniversityDepartment of Recreology and Tourism, Faculty of Informatics and Management, University of Hradec KrálovéFaculty of Economics Administrative and Social Sciences, Istanbul Gelisim UniversityDepartment of Humanities and Social Sciences, National Institute of Technology (NIT) RourkelaAbstract Background/Objectives Many economies are on the trajectory of alternative growth drivers other than conventional capital and labor. Access to credit facilities is a pertinent indicator of economic growth. In line with the United Nations Sustainable Development Goals (UNSDGs-8) agenda, the national goal for sustainable development for most economies and Arab economies is no exception. Therefore, the current study adopts a traditional growth model by exploring the relationship between gross domestic product (GDP) per capita, credit for private sectors, ratio of exports, real GDP, and per labor force participants for selected Arab economies annually from 2001 to 2020. Research design This study leverages the Fourier Kwiatkowski–Phillips–Schmidt–Shin (KPSS) unit root test and second-generation panel econometrics as estimation techniques, such as Westerlund and Edgerton panel cointegration test, and the use of two estimators, namely the augmented mean group (AMG) and common correlated error mean group (CCEMG), to obtain robust results. Findings Empirical findings from Westerlund and Edgerton panel cointegration tests validate the long-run equilibrium relationship among the outlined variables. Further empirical results indicate that the share of exports is negatively significant with economic growth in countries such as Kuwait, Lebanon, Tunisia, and Jordan. Additionally, savings and labor force participation have a positive relationship with economic growth in individual countries such as Algeria and Bahrain. As per the panel, there is no significant relationship between labor force participation and economic growth. This indicates that the skilled labor force enhanced economic growth. Conclusions These findings come with inherent far-reaching policy suggestions for economies and panels. Further details on country-specific policy actions are presented in the concluding section. Graphical Abstracthttps://doi.org/10.1186/s40854-022-00426-6Arab economiesClassical growth modelPanel econometricsSDGSavings-investment
spellingShingle Amjad Taha
Mucahit Aydin
Taiwo Temitope Lasisi
Festus Victor Bekun
Narayan Sethi
Toward a sustainable growth path in Arab economies: an extension of classical growth model
Financial Innovation
Arab economies
Classical growth model
Panel econometrics
SDG
Savings-investment
title Toward a sustainable growth path in Arab economies: an extension of classical growth model
title_full Toward a sustainable growth path in Arab economies: an extension of classical growth model
title_fullStr Toward a sustainable growth path in Arab economies: an extension of classical growth model
title_full_unstemmed Toward a sustainable growth path in Arab economies: an extension of classical growth model
title_short Toward a sustainable growth path in Arab economies: an extension of classical growth model
title_sort toward a sustainable growth path in arab economies an extension of classical growth model
topic Arab economies
Classical growth model
Panel econometrics
SDG
Savings-investment
url https://doi.org/10.1186/s40854-022-00426-6
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AT festusvictorbekun towardasustainablegrowthpathinarabeconomiesanextensionofclassicalgrowthmodel
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