Are structural policies in countries bordering mediterranean appropriate to economic convergence: Panel ARDL application

Figures & data

Table 1. Effectiveness conditions for the euro-mediterranean partnership

Objective	The expected benefits ex-ante	Ex-ante potentialcosts
Establishment of a free trade area	- Increase in competitiveness. - Development of synergies and exploitation of increasing returns to scale.	- Contraction of the amount of customs duties (fiscal policy to redefine). - Search for specialization in promising sectors
Reallocation of resources and convergence	- Increase in living standards. - Social progress: raising the standard of living - Decrease in unemployment. Reduction of regional disparities.	- Structural reforms aimed at liberalization and macroeconomic stabilization. - Development of infrastructures, heavy investment (education, research, health)

Source: Lhéritier (2001) p 19.

Figure 1. Volatility of real per capita GDP in CBM countries, 1975–2012.

Figure 2. Evolution of real per capita GDP in CBM countries.

Table 2. Basic statistics

Variable	Mean	Min	Max	St.Dev
RPCGDP	8.879303	7.164721	10.45237	0.8834986
HC	4.452391	3.810654	4.760241	0.2296525
PRIVY	3.920961	2.609209	5.370924	0.7044703
OPEN	3.927827	2.182675	4.751041	0.3632247
FDI	−0.116524	−5.744605	2.243313	1.263101

*Where RPCGDP, HC, PRIVY, OPEN, and FDI denote the per capita real GDP, the Human Capital, the Domestic credit to the private sector in percent of GDP, the Openness trade and Foreign Direct Investment indicators relatively.

Table 3. Panel unit root tests results

	IPS		ADF-Fisher		Level of Integration
	Level	First Difference	Level	First Difference
RPCGDP	0.4833	−6.1361***	0.4771	−5.9081***	I(1)
HC	1.3547	−9.0054***	1.4297	−7.7424***	I(1)
PRIVY	1.9896	−4.7927***	2.0663	−4.6475***	I(1)
OPEN	−2.1277**	−8.0701***	−2.2655**	−7.3427***	I(0)
FDI	−3.2687***	−11.1489***	−3.2706***	−9.3062***	I(0)

Notes: ** and *** indicate significance at 5% and 1% level, respectively. Lag length selection is based on the Schwartz Bayesian Criterion. ADF–Fisher test is based on Choi’s-Z statistic.

Table 4. PMG estimates and MG estimates for CBM region

Variables	Pooled Mean Group Estimates			Mean Group Estimates
	Coef.	Std.Err	P.Value	Coef.	Std.Err	P.Value
Dependent Variable: Log real per capita GDP
Long-Run Coefficients
HC	0.6629***	0.3758	0.007	0.5483	0.5714	0.337
PRIVY	0.4257	0.1554	0.816	−0.4256	0.3638	0.242
OPEN	0.9386**	0.2966	0.002	0.0413	0.2176	0.850
FDI	−0.0204	0.0248	0.411	0.0937***	0.0319	0.003
Hausman Test	14.41 0.006
Err. Corr. Coef.	−0.1213***	0.0460	0.008	−0.2009***	0.0553	0.000
Short-Run Coefficients
ΔHC	0.6665***	0.2573	0.010	0.5579**	0.2394	0.020
ΔPRIVY	0.1257	0.0849	0.139	0.1642*	0.0845	0.052
ΔOPEN	0.1085**	0.0645	0.092	−0.0830	0.0546	0.129
ΔFDI	0.0083**	0.0050	0.099	0.0020	0.0055	0.706
Linear Trend	0.0066***	0.0021	0.002	0.0119***	0.0036	0.001
Intercept	−12.152***	3.9752	0.002	−21.157***	6.4319	0.001

Note: *, ** and *** indicate significance at 10%, 5% and 1% level, respectively. Under the long-run slope homogeneity, the Hausman statistic is asymptotically distributed as a Chi-squared with four degrees of freedom. The lag structure is ARDL (1,1,1,1,1), and the order of variables is Real per capita GDP, Human Capital, Financial Development, Openness, and Foreign Direct Investment. All the variables expressed in natural logarithm form.

Table A.1. Variables definitions and descriptions

Notation	Variables	Definitions	Sources
RPCGDP	Real GDP per capita	GDP per capita based on purchasing power parity (PPP), constant 2000 US $.	WDI, World Bank 2015
HC	Human Capital	Measured by total secondary school enrolment: The gross enrolment ratio for secondary education relates total enrolment regardless of age, to the population which, according to national regulations, should be enrolled at this level of education.	WDI, World Bank 2015
PRIVY	Financial development indicators	Private Credit by Deposit Money Banks to GDP.	Beck and Levine Financial Structure Dataset, World Bank 2015
OPEN	Trade openness	Trade openness: (exports +imports)/GDP.	International Monetary Fund (IFS-2015)
FDI	Foreign Direct Investment	Foreign direct investment net inflow in current US dollar.	UNCTAD 2015

Lhéritier, M. (2001). Les enjeux du partenariat euro-Mediterranean: Entre constraints et opportunités. In G. Benhayoun, R. Bar-El, E. Menipaz, & M. Lhéritier (Eds.), La coopération régionale dans le bassin méditerranéen (Vol. 2, pp. 15–30).

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