Potential financing sources of investment and economic growth in North African countries: A causality analysis

Potential financing sources of investment and economic growth in North African countries: A causality analysis

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Article ID: iaor2013421
Volume: 35
Issue: 1
Start Page Number: 150
End Page Number: 169
Publication Date: Jan 2013
Journal: Journal of Policy Modeling
Authors:
Keywords: finance & banking
Abstract:

This paper investigates the causality interactions between potential financing sources of investment and economic growth in North African countries. For each one of them, trivariate vector autoregressive (VAR) models were estimated. We find that domestic saving follows their economic growth. We also find that the foreign capital‐led growth hypothesis was frequently confirmed in Egypt and Algeria, but was observed only for grants in Morocco and Tunisia. These results underscore the merits of a case by case approach and have some policy implications on the more suitable financing sources to enhance economic growth in these countries.

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