Determinants of Economic Growth in Algeria: Evidence From an ARDL Bounds Testing Approach (1990–2024)

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Summary

This study analyzes the determinants of economic growth in Algeria over the period 1990–2024 using an Autoregressive Distributed Lag (ARDL) bounds testing approach. It examines the short- and longrun effects of public expenditure, trade openness, foreign direct investment, education expenditure, and oil rents on economic growth. The empirical findings confirm the existence of a stable long-run relationship among the variables. Estimation results show that public expenditure, trade openness, and education expenditure exert a positive and statistically significant impact on economic growth, highlighting the critical role of public investment, trade integration, and human capital accumulation. Foreign direct investment also contributes positively, although its impact remains relatively modest. Conversely, oil rents display a statistically significant negative effect, underscoring the structural limitations of a growth model reliant on hydrocarbon revenues. These findings emphasize the imperative to accelerate economic diversification, enhance human capital, and improve public policy effectiveness to foster sustainable and resilient growth in Algeria.