The Impact of External Debt on Gross Domestic Product ) An Econometric Study on Selected MENA Countries(

Abstract

This study aimed to analyze the impact of external debt on gross domestic product (GDP) in four selected countries from the Middle East and North Africa (MENA) region, namely Egypt, Turkey, Morocco, and Jordan, over the period (2000–2022). Foreign direct investment (FDI) was also included as a control variable to account for external capital flows and to enhance the robustness of the estimated model. The study employed the Panel CS-ARDL methodology within the framework of the Unrestricted Error Correction Model (UECM). The Pesaran CD test indicated the presence of strong cross-sectional dependence among the sample countries, while second-generation unit root tests (CIPS) revealed mixed orders of integration, with variables being either level-stationary or integrated of order one. The empirical results confirmed the existence of a statistically significant long-run equilibrium relationship (cointegration), with an error correction coefficient estimated at (-0.441). The findings further demonstrated that external debt exerts a positive effect on GDP in both the short and long run, while foreign direct investment plays a complementary and vital role in promoting economic growth. In light of these findings, the study provides policy recommendations concerning the Syrian economy in the post-war period.