Open Access Peer-reviewed Research Article

Main Article Content

Saif Eddine Ayouni corresponding author
Ramzi Farhani
Mekki Hamdaoui


This paper examined the effect of external factors on economic growth in Tunisia. The economic analysis was carried out using recent quantitative technique of annual time series data from 1976 to 2017. Based on co-integration test with unknown structural breaks and ARDL bound testing we investigated importance of each factor in stimulating economic growth. Our results show that in the long-run FDI does not affect economic growth. Remittances and imports negatively affect economic growth. Exports promote economic growth such that a 1% increase stimulates economic activity by 0.702%. In the short term, our estimates emphasize a structural break in 1988 linked to the structural adjustment program. Likewise, FDI does not have a significant effect on economic growth while remittances and imports slow economic growth significantly at the conventional level. On the other hand, exports form a relevant engine of economic growth. Therefore, our conclusions imply that political decision-makers in Tunisia must guarantee certain level of training and infrastructure to ensure the gain of transfers of new technologies and experiences related to the FDI. Thus, Tunisia must encourage peoples living aboard to create new investment opportunities instead of just supporting their families for consumption. In addition, the state must develop financial system capable of transferring funds for investment in order to better benefit from remittances. Finally, the government must restrict import of consumer goods and allow import of equipment and machinery goods that promote production and economic growth.

economic growth, external factors, structural change, ARDL

Article Details

How to Cite
Ayouni, S., Farhani, R., & Hamdaoui, M. (2022). External factors and economic growth in Tunisia: ARDL approach with structural change analysis. Frontiers in Management and Business, 3(1), 178-193.


  1. Romer PM. Increasing returns and long-run growth. Journal of Political Economy, 1986, 94(5): 1002-1037.
  2. Narayan PK and Smyth R. Temporal Causality and the Dynamics of Exports, Human Capital and Real Income in China. International Journal of Applied Economics, 2004, 1(1): 24-45.
  3. Chen H and Jayaraman T. Role of Financial Sector in the Remittances-Growth Nexus in Fiji, Remittances Review. Transnational Press London, UK, 2016, 1(1): 17-36.
  4. Makun KK. Imports, remittances, direct foreign investment and economic growth in republic of the Fiji Islands: An empirical analysis using ARDL approach. Kasetsart Journal of Soacial Sciences, 2018, 39(3): 439-447.
  5. Marques AC, Fuinhas JA and Pais DF. Economic growth, sustainable development and food consumption: Evidence across different income groups of countries. Journal of Cleaner Production, 2018, 196: 245-58.
  6. Nourzad F and Powel J. Openness, growth, and development: Evidence from a panel of developing countries. Scientific Journal of Administrative Development, 2003, 1(1): 72-94.
  7. Pesaran MH and Shin Y. An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis, Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, Strom, S. (ed.) Cambridge University Press, 1999, 1-31.
  8. Pesaran MH, Shin Y and Smith RJ. Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 2001, 16(3): 289- 326.
  9. Jouini J. Economic growth and remittances in Tunisia: bi-directional causal links. Journal of Policy Modeling, 2015, 37(2): 355-373.
  10. Nwaogu GUJ and Ryan JM. FDI, foreign aid, remittances and economic growth in developing countries. Review of Development Economics, 2015, 19(1): 100-115.
  11. Kumar RR. Remittances and economic growth: A study of Guyana. Economic Systems, 2013, 37(3): 462-472.
  12. Imai KS, Gaiha R, Ali A, et al. Remittances, growth and poverty: New evidence from Asian countries. Journal of Policy Modeling, 2014, 36: 524-538.
  13. Meyer D and Shera A. The impact of remittances on economic growth: An econometric model. Economia, 2017, 18(2): 147-155.
  14. Bahadir B, Chatterjee S and Lebesmuehlbacher T. The macroeconomic consequences of remittances, Journal of International Economics, 111(C): 214-232. bae, S. Durlauf,and B.E. Hansen. Cambridge, UK: Cambridge University Press, 2018, 212-237.
  15. Grossman G and Helpman E. Innovation and growth in the global economy, MIT Press, Cambridge, MA, 1991.
  16. Lucas R. On the mechanics of economic development. Journal of Monetary Economics, 1988, 22(1): 3-42
  17. Solow RM. A contribution to the theory of economic growth. The Quarterly Journal of Economics, 1956, 70(1): 65-94.
  18. Todaro MP and Smith SC. Economic development, Pearson Addison Wesley, London, UK, 2006.
  19. Almfraji M and Almsafir KM. Foreign direct investment and economic growth literature review from 1994 to 2012. Procedia-Social and Behavioral Sciences, 2014, 129: 206-213.
  20. Khathlan AK. The link between remittances and economic growth in Pakistan: A boon to economic stability. British Journal of Economics, Management & Trade, 2012, 2(3): 167-185.
  21. Goh SK, Sam SY and McNown R. Re-examining foreign direct investment, exports, and economic growth in Asian economies using a bootstrap ARDL test for co-integration. Journal of Asian Economics, 2017, 51(C): 12-22.
  22. Chaudhary MS, Shirazi NS and Chaudhary MAS. Trade policy and economic growth in Bangladesh: A revisit. Pakistan Economic and Social Review, 2007, 45(1): 1-26.
  23. Jawaid ST. Trade openness and economic growth: A lesson from Pakistan. Foreign Trade Review, 2014, 49(2): 193-212.
  24. Barro RJ. Determinants of Economic Growth: A Cross-Country Empirical Study. National Bureau of Economic Research. Working Paper, 1996, 5698.
  25. Engle R and Granger C. Co-integration and Error Correction: Representation, Estimation and Testing. Econometrica, 1987, 55: 251-276.
  26. Johansen S and Juselius K. Maximum Likelihood Estimation and Inference on Cointegration- with Applications to the Demand for Money, Oxford Bulletin of Economics and Stati. Journal of AsianEconomics, 1990, 51(C): 12-22.
  27. Bai J and Perron P. Estimating and Testing Linear Models with Multiple Structural Changes. Econometrica, 1998, 66: 47-78.
  28. Bai J and Perron P. Computation and Analysis of Multiple Structural Change Models. Journal of Applied Econometrics, 2003a, 18: 1-22.
  29. Clemente J, Montanes A and Reyes M. Testing for a Unit Root in Variables with a Double Change in the Mean. Economics Letters, 1998, 59(2): 175-182.
  30. Hatemi-J A. Tests for co-integration with two unknown regime shifts with an application to financial market integration. Empirical Economics, 2008, 35(3): 497-505.
  31. Sam CY, McNown R and Goh SK. An augmented autoregressive distributed lag bounds test for co-integration. Economic Modelling, 2019, 80(C): 130-141.
  32. Dickey DA and Fuller WA. Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 1979, 74(366): 427-431.
  33. Phillips PCB and Perron P. Testing for Unit Roots in Time Series Regression. Biometrika, 1988, 75(2): 335-346.
  34. Ng S and Perron P. LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power. Econometrica, 2001, 69(6) : 1519-1554.
  35. World Bank. World bank open data. [online]. Available at: https :// Accessed 28 June 2018.
  36. Bai J and Perron P. Multiple Structural Change Models: A Simulation Analysis, in Econometric Theory and Practice: Frontiers of Analysis and Applied Research, ed. by D. Corbae, S. Durlauf, and B. E. Hansen. Cambridge, UK: Cambridge University Press, 212-237.
  37. Chow G. Test of Equality between Sets of Coefficients in two Linear Regressions. Econometrica, 1960, 28(3): 591-605.
  38. Andrews DWK, Lee I and Ploberger W. Optimal change point tests for normal linear regression. Journal of Econometrics, 1996, 70: 9-38.
  39. Zivot E and Andrews D. Further evidence of great crash, the oil price shock and unit root hypothesis. Journal of Business and Economic Statistics, 1992, 10: 251-270.
  40. Baum CF, Barkoulas JT and Caglayan M. Long memory or structural breaks: Can either explain non stationary exchange rates under the current float? Journal of International Financial Markets, Institutions and Money, 1956, 9(4): 359-376.
  41. Perron P and Vogelsang T. Nonstationarity and level shifts with an applicationto purchasing power parity. Journal of Business and Economic Statistics, 1992, 10: 301-320.
  42. Gregory AW and Hansen BE. Residual-based tests for co-integration in models with regime shifts. Journal of Econometrics, 1996, 70: 99-126
  43. Uddin S, Sjo B and Shahbaz M. The causal nexus between financial development and economic growth in Kenya. Economic Modeling, 2013, 35: 701-707.
  44. Bahmani-Oskooee M and Nasir ABM. ARDL approach to test the productivity bias hypothesis. Review of Development Economics, 2004, 8: 483-488.
  45. Granger CWJ. Some Properties of Time Series Data and Their Use in Econometric Model Specification. Journal of Econometrics, 1981, 16(1): 121-130.
  46. Granger CWJ. Co-integrated Variables and Error-Correcting Models, UCSD Discussion, 1983, 83-13.
  47. Johansen S. Estimation and Hypothesis Testing of Co-integration Vectors in Gaussian Vector Autoregressive Models. Econometrica, 1991, 59(6): 1551-1580.
  48. Westerlund J and Edgerton DL. New improved tests for co-integration with structural breaks. Journal of Time series Analysis, 2007, 28(2): 188-224.
  49. Narayan PK. Reformulating critical values for the bounds F-statictics approach to co-integration: an application to the tourism demand model for Fiji, Department of Economics Discussion Papers No.02/04, Monash University, Melbourne, Australia.
  50. Phillips P. Time Series Regression with a Unit Root. Econometrica, 1987, 55(2): 277-301.
  51. Brown RL, Durbin J and Evans JM. Techniques for Testing the Consistency of Regression Relations over Time. Journal of Royal Statistical Society, 1975, 37: 149-192.
  52. Andrews DWK. Heteroscedasticity and autocorrelation consistent covariance matrix estimation. Econometrica, 1991, 59: 817-858
  53. Lee J and Strazicich MC. Minimum Lagrange Multiplier unit toot test with two structural breaks. Review of Economics and Statistics, 2003, 85(4): 1082-1089.
  54. Hatemi-J A. CItest2b: GAUSS module to implement tests for co-integration with two unknown structural breaks, Statistical Software Components G00006, Boston College Department of Economics, 2009.
  55. Shahbaz M, Solarin SA, Hammoudeh S, et al. Bounds testing approach to analyzing the environment Kuznets curve hypothesis with structural beaks: The role of biomass energy consumption in the United States. Energy Economics, 2017, 68(C): 548-565.
  56. Ltkepohl H. Structural vector autoregressive analysis for co-integrated variables. AStA Advances in Statistical Analysis, Springer. German Statistical Society, 2006, 90(1): 75-88
  57. Hinkley DV. Jackknifing in unbalanced situations. Technometrics, 1977, 19: 285-292.
  58. White H. A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica, 1980, 48: 817-838.
  59. Hermes N and Lensink R. Foreign direct investment, financial development and economic growth. Journal of Development Studies, 2003, 40(1): 142-163.
  60. Borensztein E, De Gregorio J and Lee JW. How Does Foreign Direct Investment Affect Economic Growth? Journal of International Economics, 1998, 45(2): 115-135.
  61. Grg H and Greenaway D. Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?, IZA Discussion Papers 944, Institute of Labor Economics (IZA), 2003.
  62. Fayissa B and Nsiah C. The impact of remittances on economic growth and development in Africa. Working Paper Series, MiddleTennessee State University, 2008.
  63. Vargas SC, Jha S and Sugiyatro G. Remittances in Asia: Implications for the Fight against Poverty and the Pursuit of Economic Growth, Asian Development Bank Economics Working Paper Series, no 189, Manilla, 2009.
  64. Mundaca G. Remittances, Financial Market Development, and Economic Growth: The Case of Latin America and the Caribbean, Review of Development Economics, 13(2): 288-303. of biomass energy consumptionin the United States. Energy Economics, 2009, 68(C): 548-565.
  65. Kouni M. Remittances and growth in Tunisia: a dynamic panel analysis from a sectoral database. Journal of Emerging Trends in Economics and Management Sciences, 2016, 7(5): 342-343.
  66. Krueger AO. Foreign Trade Regimes and Economic Development: Liberalization Attempts and Consequences. Cambridge, MA: Ballinger for the National Bureau of Economic Research, 1978.
  67. Coe DT, Helpman E and Hoffmaister AW. North-South R&D Spillovers. Economic Journal, Royal Economic Society, 1997, 107(440): 134-149.
  68. Mazumdar J. Imported machinery and growth in LDCs, Journal of Development Economics, 2001, 65(1): 209-224.
  69. De Long JB and Summers LH. Equipment Investment and Economic Growth. The Quarterly Journal of Economics, Oxford University Press, 1991, 106(2): 445-502.