Reviewing the Trade Openness, Domestic Investment, and Economic Growth Nexus: Contemporary Policy Implications for the MENA Region

This study researches the impact of trade openness on the economic performances of selected Middle East and North Africa (MENA) countries, while incorporating elements of domestic investments into the empirical analysis in the wake of the recent trends of trade liberalization among nations. The study is based on an empirical analysis of panel data observations from the selected countries within the framework of the Fully Modified Ordinary Least Square (FMOLS) and the Dynamic Ordinary Least Square (DOLS) regression techniques. The empirical results affirm the existence of a long-run relationship among the variables. However, while domestic investment and the size of the labor force significantly impact economic growth in a positive direction among these countries, trade openness was found to be negatively impacting economic growth for the period of the study. It is there-fore recommended that cogent effort should be directed towards investments that are crucial for the improvement of labor productivity and the production value chains in the domestic economies to dissuade or minimize the rate of export of raw primary commodities. Also, adequate steps should be taken to improve the overall business environment, remove trade impediments, and strengthen institutions among the countries in the region to harness the benefits of trade in our increasingly globalized world.

Automated summary

This study examines the impact of trade openness and domestic investments on economic growth in selected Middle East and North Africa (MENA) countries. The results show that domestic investments and labor force size have a positive effect on economic growth, while trade openness has a negative effect. The study suggests focusing on improving labor productivity and domestic production value chains, as well as creating a favorable business environment and removing trade barriers to maximize the benefits of trade.