Hassen Soltani

Department of Administration, College of Science and Arts in Balgarn, University of Bisha, 

P. O. Box 199, Bisha, 61922, Saudi Arabia

hsoltani@ub.edu.sa

Does geopolitical risk and financial development matter for economic growth in MENA countries?

Mohamed Bilel Triki*

Department of Administration, Community College, 

University of Bisha, P.O. Box 551, Bisha 61922, Saudi Arabia

And GEF2A Lab, University of Tunis, Tunisia

mtriki@ub.edu.sa 

ORCID 0000-0002-0696-392X

*Corresponding author

Mohamed Ghandri

Department of Administration, College of Science and Arts in Balgarn, University of Bisha, 

P. O. Box 199, Bisha, 61922, Saudi Arabia

mghandri@ub.edu.sa

Fouzi Tahar Abderzag

Department of Administration, Faculty of Business, 

University of Bisha, 

P.O. Box 551, Bisha, 61922, Saudi Arabia

fabdelrzag@ub.edu.sa

Abstract. This study seeks to study the impact of financial development, foreign direct investment (FDI) and geopolitical tensions on economic growth for MENA countries. Geopolitical tensions are explored by the geopolitical variable risk index developed by Caldara and Iacoviello in 2016. We apply the Panel Vector Auto-regression (PVAR) model to a panel of MENA countries, the estimates show that the financial development factor has no impact on some countries but has an effect on others. This insignificant impact of financial development on economic growth is mainly linked to the quality of the financial systems in the MENA countries, which has remained underdeveloped, despite the improvement attempts that had been made by these countries. On the other hand, higher GPR results in higher economic vulnerability in the MENA countries, so the militaristic policies of countries and the influence of wars in the region brakes the development of specific economies and does not manage to fascinate foreign investors and convey economic growth.

Received: March, 2020

1st Revision: February, 2021

Accepted: March, 2021

DOI: 10.14254/2071-8330.2021/14-1/7

JEL Classification: F23, C22, F43, C52

Keywords: FDI, GPR, financial development, economic growth, MENA countries, PVAR