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The Indirect Effect of Democracy on Economic Growth in the MENA Region (1990–2015)

1
Department of Economics, Faculty of Economic Studies & Political Science, Alexandria University, Smouha, Alexandria 21648, Egypt
2
Bibliotheca Alexandrina, Seragaldin Institute for Multidisciplinary Advanced Research (SIMAR), Chatby, Alexandria 21526, Egypt
*
Author to whom correspondence should be addressed.
Economies 2018, 6(4), 61; https://doi.org/10.3390/economies6040061
Received: 29 July 2018 / Revised: 8 November 2018 / Accepted: 13 November 2018 / Published: 19 November 2018
(This article belongs to the Special Issue Selected Papers from 2018 IAC-MEM Conferences)
This paper examines the indirect effect of democracy on economic growth using a dataset of 17 MENA countries from 1990 to 2015. Democracy is assumed to affect growth through a series of channels: education, health, physical capital accumulation per labor, government consumption, and trade openness. A system of six simultaneous equations using 3SLS, is used to estimate the effect of democracy on growth through these channels. For further analysis, the countries are classified into groups according to the democratic status on the one side, and the level of income on the other. The results indicate that democracy enhances growth through its positive effect on health in all classifications of countries within the MENA region. However, the effect of democracy on growth through education and physical capital/labor is non-monotonic. Democracy hinders growth through government size and trade openness. Once all of these indirect effects are accounted for, the overall effect of democracy on growth is negative in less democratic countries and poor countries, but positive in more democratic countries and rich countries. View Full-Text
Keywords: economic growth; democracy; MENA; simultaneous equations economic growth; democracy; MENA; simultaneous equations
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Nosier, S.; El-Karamani, A. The Indirect Effect of Democracy on Economic Growth in the MENA Region (1990–2015). Economies 2018, 6, 61.

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