The main objective of this paper is to quantify the importance of external shocks in domestic and external variables fluctuations for a sample of three North African countries (Algeria, Morocco, and Tunisia) using a VAR model estimation with quarterly data during the period 1990-2010. Since the early 1990s, Maghreb countries have implemented these last year, structural liberalization policies and modernized banking and financial regulations in order to strengthen their financial systems, establish an economic union between them and improve their economic growth rates. Accompanying to these developments, the study of this relationship has been largely analyzed in the literature. In fact, several theoretical and empirical studies have been elaborated to understand the process of international banking and financial shocks and their impact on economic development of countries as well as on the ability to create economic integration between them. Results find that external shocks negatively affect economic growth of Maghreb countries and impede the implementation of financial integration project. In addition, we document the dynamic response of each studied variable to external financial stress in these economies. Our results on variance decompositions and impulse responses functions show that Maghreb countries appear especially sensitive to the trade and the financial channel.

The purpose of this paper is to study the determinants of foreign direct investment (FDI) and empirically examine their effects on the growth of the Arab Maghreb Union (AMU) countries. This relationship has largely been analyzed in the economic literature. The results are mixed, some of the theoretical and empirical studies have shown that there is no positive relationship between FDI and economic growth, while others have found that FDI affect positively and significantly the long-run economic growth. Indeed, AMU countries have developed in recent years, an economic policy aimed at promoting the development of their economy. In these economies, FDI is considered as a key factor towards progress in economic sectors. This type of external funding has shown an increasing trend over time; however, the achievements of AMU countries in attracting FDI are still low compared to their potential and their performance to attract more foreign investments. In this paper, we use a dynamic panel system GMM estimator to study the determinants and the growth effects of FDI in three Maghreb countries (Algeria, Morocco, and Tunisia) during the period 1980-2010. Our empirical investigation suggests that, under particular economic and financial conditions, such as the adoption of an export promotion trade regime, restoring international competitiveness and diversification of exports, foreign direct investment affects positively the growth rate in the long run and improves the economic situation in AMU countries.