Determinants of Inclusive Growth in the Egyptian Economy: An ARDL Approach

Research Abstract

Abstract Egypt ranked 115th of 2018 out of 189 countries in the Human Development Index, ranking 128 out of 190 countries in the Doing Business Report issued by the World Bank in 2018 and ranked 94th in the Global Competitiveness Report of the World Economic Forum out of 140 countries. The average growth rate of more than 5%, but the growth does not translate in all sectors of the state and all categories of people, and this is evident in the high rates of poverty and unemployment. This paper provides an empirical analysis of the relationship between the exclusive economic growth and its determinants, as studies in this area are limited. Against this background, the study used annual data from 1991 to 2017. Both the Autoregressive Distributed Lag (ARDL) approach, using time series data and the error correction model (ECM), was used to estimate long- and short-term parameters between variables. The results indicate a negative relationship between government consumption, population growth on short- and long-term and exclusive economic growth. In contrast, the inflation variable indicates a positive impact on short- and long-term and exclusive economic growth. Finally, there is a negative relationship between FDI, Trade openness on short- and long-term and exclusive economic growth. Based on these findings, the study recommends that policy makers take appropriate steps to increase the flow of foreign direct investment towards productive areas that contribute effectively to economic and social development, reduce inflation and move towards improving the quality of the population in order to achieve Exclusive economic growth through more attention to health and education.

Research Keywords

Key Words: Exclusive Growth, Autoregressive Distributed Lag (ARDL), Error Correction Model (ECM),Egypt