Abstract:

This study explores the long-run and causal relationships between democracy, internet use and income in selected 15 MENA countries for 1999-2012 period by using dynamic panel data methods under cross-sectional dependence. According to cross-sectional dependence CD test and CIPS unit root test results there exist cross-section dependence for all variables; per capita real income, democracy, internet use variables are stationary in their first differences. This study employ Westerlund-Durbin- Hausman (2008) method for panel cointegration test; Augmented Mean Group estimator (Eberhardt & Bond, 2009; Eberhardt & Teal, 2010, 2011) to estimate the long-run coefficients and Dumitrescu and Hurlin (2012) causality model to investigate the causal relationships between the variables. The results can be summarized as follows: i) There exists a cointegration relationship between nonstationary variables. ii) Democracy has negative impact on the per capita real GDP. iii) There is no evidence of causal relationship between economic growth, growth of democracy and growth of internet use.

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