Analysis Of Real Activities In The Syrian Economy: 1980 - 2010
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Date
2016-09
Authors
Mohsen, Adel Shakeeb
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Abstract
This study attempts to analyze the real activities in the Syrian economy through
investigating the determinants of overall and sectoral growth, public and private
sector investment and foreign trade in the country. The main issue in this study is
how to improve overall and sectoral growth, public and private sector investment and
foreign trade in Syria. The VAR model, ADF unit root test, Johansen cointegration
test, Granger causality test, impulse response functions (IRF), and variance
decomposition (VD) analysis are used in this study. The results of this study show
that the GDP of Syria is positively related to public sector investment, private sector
investment, exports, oil price, and population growth. Public investment has the
biggest effect on the GDP. Agricultural output is positively related to capital, food
exports, final consumption expenditure and arable land, but negatively related to oil
price. Arable land has the largest effect on agricultural output. Industrial output is
positively related to capital, manufactured exports, population and agricultural
output, and negatively related to oil price. Agricultural output has the largest effect
on industrial output. Public sector investment is positively related to oil price, gross
domestic income, external debt, and foreign aid, but negatively related to private
sector investment. Gross domestic income and oil price have the greatest effects on
public sector investment. Private sector investment is positively related to public
sector investment, trade openness, GDP per capita, and oil production. GDP per
capita has the biggest effect on private sector investment. Exports are positively
related to trade openness, oil price, and communication facilities, but negatively
related to the real exchange rate and final consumption expenditure. Communication
facilities have the biggest effect on exports. Imports are positively related to GDP per
capita, real exchange rate, trade openness, oil production, and capital. GDP per capita
has the greatest effect on imports. Furthermore, the main findings show that both
public and private sector investment have important roles in supporting the Syrian
economy. However, public sector investment motivates private sector investment
through creating an attractive investment climate, while private sector investment
crowds out public sector investment in the country, which is associated with the
government’s strategy to move the Syrian economy from central planning to a social
market economy. Trade openness, oil price and population also play an important
role in supporting the Syrian economy. The results of this study support the
neoclassical and endogenous growth theory, investment theories, international trade
theories, Wagner's law, export-led growth (ELG) theory, and elasticity approach to
foreign trade and exchange rate. The main recommendations of this study is that the
Syrian government should work harder to improve the Syrian economy through
improving the performance of the public sector, encouraging more private sector
investment, upgrading infrastructure and improving the human capital in the country.
It is also necessary to increase industrial and agricultural productivity, and enhance
the quality and competitiveness of Syrian products in the local and global markets, in
addition to undertaking further trade liberalization measures, which can encourage
investment and help to achieve economies of scale with the usage of modern
technology in the production process. Finally, the Syrian government can further
open up the economy to increase foreign trade and diversify its exports.
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Keywords
The real activities in the Syrian economy through investigating the determinants , of public and private sector investment and foreign trade in the country.