Achieving sustainable economic development amidst conflicts: a study of the role of ease of doing business in development plan

The economic situation of many nations, especially developing countries, demands urgent and immediate attention on the best practices to revamp and sustain socio-economic development. Terrorism and bureaucratic processes are threatening the easy start-up and survival of new businesses, which are considered the engine of economic growth and development. On this note, this study examined the ease of doing business and sustainable development amid a choking political and business environment in Algeria. Algeria’s quarterly data from 2006Q1 to 2020Q4 are utilized to examine the structural impact of terrorism and other selected variables on Algeria’s sustainable development. A dual model of economic growth (GDP per capita) and ease of doing business with a novel non-linear autoregressive distributed lag (NARDL) method was employed. Findings from the non-linear ARDL approach show that income development and ease of doing business have a two-way relationship. This means that both variables act as a determinant of each other. However, terrorism is found to impact negatively on both income development and ease of doing business in both models. Tourism arrival has asymmetric impact on economic development. While it is not supporting the economic growth in the short run, it turned to impact the economic development in the long run; however, tourism is found to impact the ease of doing business positively in both periods. Surprisingly, foreign direct investment (FDI) is found to impact positively on economic growth but negatively relate to ease of doing business. The findings show that terrorism and political instability are anti-economic growth and ease of doing business and hence capable of obstructing the sustainable development of the country. Again, tourism has a dual influence on the sustainable economic development of Algeria. It is not adding directly to the economic growth of Algeria; however, it is adding indirectly through a positive link with the ease of doing business in the country. Policies to mitigate terrorism and increase ease of doing business will support the sustainable economic goal of Algeria.