Conference Paper
Driving Sustainable Competitiveness in Selected MENAAP Countries: Synergies Between Financial Development and Green Growth
No.
ERF32AC_36
Publisher
ERF
Date
May, 2026
Topic
G2. Financial Institutions and Services
O4. Economic Growth and Aggregate Productivity
Q5. Environmental Economics
O1. Economic Development
The aim of this paper is to analyze the synergistic roles and the combined influence of financial development and green growth in advancing sustainable competitiveness across the Middle East, North Africa, Afghanistan, and Pakistan (MENAAP) economies, which remains underexplored, especially in economies heavily reliant on natural resources. In order to explore the determinants of the Global Sustainable Competitiveness Index (GSCI), this paper uses a panel data analysis for 16 MENAAP countries spanning from 2012 to 2024. The main findings reveal that financial development significantly enhances sustainable competitiveness mainly through financial markets which play a chief role. Moreover, green growth appears as a stable driver of GSCI, emphasizing the crucial role of environmental governance, efficient resource use, and green innovation. While outward FDI reduces sustainable competitiveness, reflecting capital deviation from local productive and green sectors. Additionally, heterogeneity analysis shows that in Gulf Cooperation Council (GCC) countries, financial development has a larger impact, whilst green policy advancement proves to be the dominant competitiveness driver in non-GCC economies. To accelerate competitiveness gains, policy makers should prioritize developing domestic financial markets and ameliorating regulatory frameworks, as well as channeling financial resources toward green industrial transformation. For non-GCC countries, deeper financial systems are needed and expanded green financing mechanisms seem to be essential to convert environmental progress into sustainable competitiveness.