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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Author(s)
Alaa Dayoub, Fu Qiang
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DOI:10.17265/1537-1506/2017.03.001
Affiliation(s)
Chongqing University, Chongqing, China
ABSTRACT
This
paper attempts to investigate the effects of several financial and trade policies
on the total investment in Syria, over the period 1980-2010 (before the current
war). The study employs Johansen co-integration test to check the presence of long-term
relationship between explanatory and dependent variables. In addition, Vector Error
Correction Model (VECM) further studies the causal relationship from dependent variable
to independent variables. The Johansen co-integration test indicates a significant
long-term relationship among the variables. Moreover, the Vector Error
Correction Model also suggests the long run causality from the imports, exports,
capital public expenditures, and subsidies to total investment. The study’s result
indicates that the imports and the capital public expenditures played a significant
role in supporting the total investment in the country before the war, while there
was a negative role of exports in the total investment, and there was no impact
of subsidies on the total investment. Before the war, foreign investment in Syria
was over dominated by European Union. The paper proposes to diversify the target
of investment flow to Syria, especially from China and the other BRICS countries
that can take advantages from Syria and can support Syria economy after the war
by the strategy of “One Road One Belt”. These results may assist Syrian policy makers,
after the war, to develop an economic plan that takes into account the effects of
these policies to improve the total investment which will help Syria in rebuilding
the economy.
KEYWORDS
trade policy, financial policy, total investment, investment climate
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