Test by the SVECM model of the impact of the exchange rates and foreign direct investment on the economic growth of the Maghreb region

  • Received July 26, 2019;
    Accepted September 16, 2019;
    Published April 7, 2020
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  • Article Info
    Volume 19 2020, Issue #1, pp. 1-14

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The purpose of this article is to identify the main sources of cyclical fluctuations affecting the five Maghreb countries in a general analysis framework through the impact of the exchange rates and foreign direct investment. Besides, will consider in this study a set of variables taking into account the real monetary and fi ancial dimensions of the economies. Therefore, authors have adopted an approach in terms of the VECM Structural model and analyzed the robustness of the response functions. Indeed, the estimation results showed the existence of a regional dynamics where the respective sensitivity to change of the real exchange rate is the same. In addition, FDI and REER stimulate economic growth of the Maghreb economies in exchange for regime transmutations. In addition, the participation of FDI in the socio-economic development seems to be weak without the implementation of a policy of support and guidance aimed at reducing the catastrophic effects on the economy and reorienting its investments towards sectors with a high added value.

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    • Figure 1. Trend evolution of FDI per country
    • Figure 2. Trend evolution of the REER per country
    • Figure 3. Reaction of different shocks to foreign direct investment (FDI)
    • Figure 4. Reaction of different shocks on the exchange rate (REER)
    • Table 1. Overall descriptive analysis of basic variables
    • Table 2. Unit root tests of variables in logarithm
    • Table 3. Decomposition of the Variance of Foreign Direct Investment (FDI)
    • Table 4. Variance Decomposition of the Real Effective Exchange Rate (REER)