Measuring and analyzing the Impact of some Macroeconomic Variables and Political Stability on Economic Growth: An Applied Study on the Iraqi Economy for the Period (2023–2004)

Abstract

The study of economic growth represents a fundamental pillar in understanding the pathways to improving living standards and achieving sustainable development, particularly when analyzing the impact of macroeconomic variables and political stability. The Iraqi economy witnessed sharp fluctuations in growth during the period (2004–2023) due to the interplay of economic factors and political unrest. This period highlights the influence of political transformations and global oil prices on economic performance and overall stability. This research aims to measure and analyze the impact of a set of macroeconomic variables-namely, broad money supply (M2), nominal exchange rate, inflation rate, interest rate, net trade balance, and net public budget-alongside political stability on economic growth in Iraq over the period 2004-2023. The study adopts an analytical and econometric approach using the Autoregressive Distributed Lag (ARDL) model. Among the key findings: a positive and statistically significant relationship was identified between economic growth and each of the following variables-broad money supply, nominal exchange rate, net trade balance, and political stability. Conversely, a negative and significant relationship was found with the inflation rate, interest rate, and net public budget. The study concludes with several recommendations, most notably: achieving sustainable economic growth in Iraq requires an integrated policy package that includes expanding money supply, encouraging investment within a disciplined monetary framework, improving budget efficiency by directing spending toward growth-enhancing sectors, supporting exports and economic diversification, and strengthening political stability through good governance and anti-corruption efforts to ensure a stable and investment-friendly economic environment.