Re-visiting the determinants of sustained growth of the MENA countries

The past economic literature on the Middle East and North Africa (MENA) region has often focused on oil—economy relationship in the quest to analyse the sustainability of long-run economic growth across the countries of the region. Malik, Masood and Ozturk (2020) concluded that the economic growth performance of the region is highly volatile and identified the number and timing of the breakpoints in the long-term trend of gross domestic product (GDP) across the MENA countries. The present research paper extends further the analysis of Malik et al. (2020) to determine the coincident changes in various determinants of GDP around the breakpoints. A vector of explanatory variables drawn from the neoclassical and endogenous growth theories and empirical economic literature particularly relevant to the MENA region are tested for the analysis. The statistical results of the paper highlight that up-breaks in GDP are closely associated with the statistically significant improvements in the growth rate of physical capital formation only, while the down-breaks are associated with a statistically significant decline in the growth rates of physical capital formation, employment, mining value addition, oil production, terms of trade, trade openness, inflation, domestic credit to the private sector, and human capital. The empirical findings of the study reveal that the economic environment of the MENA region is highly unsustainable. The study also discusses policy recommendations.