Economic Sustainability of the MENA Region

Abstract

Abstract This paper calculates an index measuring economic sustainability for the mainstream economy in the MENA region during the period 1999–2016. Our approximation says that a large value of the index indicates more stress on the economy or low sustainability and vice versa. We also explore some macroeconomic variables as potential determinants of economic sustainability. We employ the panel data analysis, in particular the feasible generalized least squares (FGLS). Our results show that economic development, trade openness, and political stability encourage economic sustainability. In contrast, government expenditures and control of corruption hinder the sustainability of the economy. Our paper suggests that policymakers should concentrate on economic development, enhance the trade openness, and create political stability environment to strengthen economic sustainability. JEL classifications: I31, O11, Q01 Keywords: Economic sustainability; Economic development; Panel analysis; FGLS; MENA region