Terms of Trade Volatility, Export Instability and Economic Growth in Selected MENA Countries

The main objective of this study is to investigate the impact of the terms of trade volatility and export instability on economic growth of Iran and a number of selected Middle East and North Africa (MENA) countries separately. In this study, the Johan­sen Juselius cointegration and Vector Error Correction Model (VECM), have been used to examine the relationship between long-term and short-term term effects of trade volatility, export instability and investments, on economic growth during the period of 1359 to 1392 (2013 -1980).
The estimation results demonstrate that in the long term, fluctuations in the terms of trade has a negative and significant impact on economic growth of Iran, Morocco, while its impact on economic growth of Jordan is less significant. The export instabil­ity has also significant negative effect on economic growth of Iran and Morocco and significant positive effect on economic growth in Jordan. The results of Vector Error Correction Model (VECM) for Iran also represent small and insignificant coefficients in the short term. Although in the two countries of Morocco and Jordan, the coefficient indicates that GDP adjusts slowly towards the long-run equilibrium.