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External factors and economic growth in Tunisia: ARDL approach with structural change analysis

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Submitted   Feb 28, 2022
Published   Mar 14, 2022
Issue    Vol 3 No 1 (2022)
DOI   10.25082/FMB.2022.01.004

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Saif Eddine Ayouni corresponding author
Faculty of Economic Sciences and Management of Sousse, University of Sousse, Sousse, Tunisia
Ramzi Farhani
Faculty of Economic Sciences and Management of Sousse, University of Sousse, Sousse, Tunisia
Mekki Hamdaoui
Faculty of Economic Sciences and Management of Tunis, University of Tunis El Manar, Tunis, Tunisia

Abstract

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.

Keywords
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. https://doi.org/10.25082/FMB.2022.01.004
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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

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