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This paper examines the relationship between external debt and economic growth in selected countries in the Middle East and North Africa (MENA) region over the period (1996-2021), using panel cointegration analysis. It further explores how governance indicators, namely control of corruption and political stability, affect the external debt-economic growth relationship. The Pedroni cointegration test confirmed a long run relationship among the variables. The dynamic OLS results indicated a positive and statistically significant, but relatively weak, impact of external debt on economic growth in one specification. Furthermore, including the governance indicator "control of corruption" in one model specification slightly strengthened the positive relationship between external debt and economic growth. As such, the MENA countries need to design appropriate policies that promote better utilization of external debt for economic growth. Moreover, these countries should improve their governance performance, especially in the control of the corruption domain.
Husseiny et al. (Sat,) studied this question.