Impact of dollar volatility and inflation on a nation’s competitiveness: evidence from the MENA region using panel models

Purpose This study aims to investigate how US dollar volatility and inflation affect national competitiveness in the Middle East and North Africa (MENA) region. Design/methodology/approach A global competitiveness index (GCI)-aligned composite measure was constructed using standardized principal component analysis for 17 MENA countries between 2000 and 2020. Panel econometric techniques were applied to assess the influence of dollar movements and inflation on competitiveness. Findings The results show that inflation exerts a persistent and significant negative effect on competitiveness across all country groups, undermining stability, distorting resource allocation and reducing productivity. By contrast, dollar impacts are heterogeneous: oil exporters and developed economies are highly exposed through trade and financial channels, while nonoil and developing economies remain primarily constrained by inflationary pressures. Research limitations/implications The findings highlight the importance of credible inflation-targeting, exchange-rate stabilization and diversification strategies and stronger institutional frameworks to enhance resilience and sustain competitiveness in MENA. Originality/value This study contributes by jointly analyzing inflation and dollar shocks within a GCI-based framework, offering new insights into how macroeconomic volatility conditions competitiveness in resource-dependent and emerging economies.