The Impacts of Liberalization and Financial Development on Economic Growth in OPEC Countries

Document Type : Review Article

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Abstract

The economic liberalization and strengthening financial markets play a crucial role in economic growth. That is why in economic literature there has always been a great emphasis on promoting a stable and sustainable growth through financial development. In the last few decades, countries with more financial openness and more developed financial markets have experienced higher economic growth. A poor approach to financial markets has caused some people to regard them as simple factors of profit or loss resulted from fluctuations in the prices of financial assets, nonetheless, due to the immensity of the impact of financial sector on economy, nowadays, economic growth is not believed to be achieved without an efficient financial sector. This study aims to investigate the impact of liberalization and financial development on economic growth in OPEC countries during 1980- 2014 using panel data and GMM methods. The results show significant positive impacts of financial openness and development on economic growth for OPEC countries.  Also, lagged dependent variable, human capital, inflation rate, trade openness, population growth rate and government expenditures have significant positive effects on economic growth.  

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References

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