Boubechtoula, YounesYounesBoubechtoula2025-09-182025-09-182025https://studentrepo.iium.edu.my/handle/123456789/33222The continued failure of Arab Maghreb Union (AMU) countries (Algeria, Libya, Mauritania, Morocco, and Tunisia) to become high-income countries has led to a renewed focus on the fundamental determinants of economic growth and the economic impact of institutional quality in these countries. The study adopted a random effect model (REM) to measure the influence of trade openness, foreign direct investment (FDI) inflows, intra-regional trade, and institutional quality on economic growth in AMU countries from 1996 to 2022 and the moderating effect of institutional quality in the system (absorptive capacity). In addition, the Toda-Yamamoto approach is used to measure causal effects between variables. The study utilized economic growth, trade openness, FDI inflows, intra-regional trade, and the human capital index which measures how education outcomes influence economic growth as macroeconomic variables. The institutional quality is proxied by the overall score of the Worldwide Governance Indicators (WGI) factors. The findings suggest that trade openness has a significant impact on economic growth, whereas FDI and human capital do not have a substantial impact. Surprisingly, intra-regional trade exhibits a significant negative effect on growth. Moreover, the analysis reveals that institutional quality directly enhances economic growth and amplifies the growth benefits of trade openness. However, institutional quality exacerbates the adverse effects of intra-regional trade, and its moderating effect on the relationship between FDI inflows and economic growth is not significant. This is due to the institutions’ inability to provide investors and enterprises with a conducive business environment. For the third objective, causality analysis indicates no significant causal relationships between trade openness, FDI inflows, and institutional quality, except for a unidirectional negative causality from institutional quality to trade openness in the AMU region between 1996 and 2022. These findings underscore the complex, context-dependent role of institutions in shaping growth trajectories in AMU countries in the long run. Policymakers should prioritize institutional reforms, revitalize intra-regional trade through harmonized policies, and align FDI strategies with local capacities. Future research could explore these relationships in other developing regions, incorporating additional variables such as technological innovation and environmental sustainability.enJOINTLY OWNED WITH A THIRD PARTY(S) AND/OR IIUMArab Maghreb UnionInvestments, Foreign -- Africa, NorthInvestments, Foreign -- Africa, WestAfrica -- Foreign economic relationsDoctoral Theses