Studies and literature of economic development are becoming more prominent in our contemporarily integrated world. Nations all over are seeking internal adjustment options to positively influence their macro-economic factors. In this context, the current issue of Journal of Economic Cooperation and Development includes eight articles which focus on: effect of terrorism on specific tourism patterns, optimal level of schooling, workers’ remittance as a driver of economic growth, stock market returns effect on global macro-economic factors, discussion of the performance of foreign aid in economic development, private sector development in the OIC, endogenous money fueling development projects, the rising significance of the Chinese Renminbi (especially in ASEAN nations). A brief synopsis of each article is given below.

The first article, “Tourist Arrivals to Muslim Countries: Pre- and Post- September 11” studies how patterns in tourism in Islamic nations changed after the terrorist attack in New York City on September 11, 2001. Using a tourism flows gravity model, the research in the paper concludes that tourism to several Islamic nations was negatively affected after September 11. Furthermore, the negative portrayal of Islam and Muslim countries in global media may have played a part in disrupting tourism in Islamic nations in recent years.

The second article, “Workers’ Ability Index and Optimal Level Of Schooling In Malaysian Service Sector” examines the impact of the Workers’ Ability Index optimal level of schooling within the service sector of Malaysia in 2015. Based on the four regression models (wages, marginal return to schooling, marginal cost, and optimal schooling level), the results indicate that the Workers’ Ability Index does not affect wages significantly; however, the index displays a positive correlation as a determinant for years of schooling. Furthermore, the paper concludes 14 years (diploma level) is the optimal years of schooling in the Malaysian schooling sector. Interestingly, results showed that 28.2 percent of respondents classify below the optimal level while 46.5 percent exceed the optimal level. It is necessary to decrease the prior statistic in the next few years.

The third article, “Workers’ Remittances and Economic Growth in Palestine: Evidence from A Computable General Equilibrium Model” analyzes the impact of workers' remittances on economic development and growth, with a focus in Palestine. Workers’ remittances are one of the largest sources of external financial flows in developing nations. In 2015, a Palestinian Social Accounting Matrix (SAM) showed (in real terms) that: the real GDP increased by 0.42%, the level of real private consumption increased by 4.95%, imports increased by 4.28%, exports declined by 6.86%, net taxes increased by 2.29%, the trade deficit increased by 10.16%, absorption increased by 3.24%, and the real exchange rate appreciated by 1.6% (from base line).

The fourth article, “Macroeconomic Factors and Equity Market of Pakistan: Evidence from Bound Testing Technique” appraises an influence of macroeconomic variables on stock market returns represented by the exchange rate change, inflation rate, interest rate, industrial production growth, and the price of crude oil. The main findings revealed cointegration to exist amongst the variables and furthermore, industrial production and interest rate are negative determinants of stock returns in the long run. The study also finds that all the macroeconomic indicators in the model drive stock market returns in the short term. Moreover, the error correction coefficient suggests a high magnitude of convergence headed for the long run equilibrium. The stock market volatility can be pinpointed to conflicting cultural influences and economic/political unrest. The article outlines issues and provides eloquent insights for investors to make optimal decisions regarding investment in Pakistan.

The fifth article, “Does Foreign Aid Promote Economic Growth in Sudan? Evidence from ARDL Bounds Testing Analysis,” examines the relationship between foreign aid and economic growth in Sudan. The paper indicates a long-term relationship between variables under consideration; specifically, foreign aid in the form of official development assistance (ODA) has a positive and significant long-term impact on economic growth in Sudan. Interestingly, the interaction between aid and corruption in public institutions imposes a negative and significant long-term impact on economic growth. From this, the paper concludes that aid spurs economic growth long term via its contributions to human capital and improving infrastructural facilities.

The sixth article, “Private Sector Development Index of OIC Countries” describes, private sector development as a multidimensional process, conceptually and empirically. It involves many efficiency, quality, sustainability, performance, and dynamism features. However, there is no single country-level measure that captures all these features of private sector development. The paper introduces a new composite index of private sector development and its four sub-indices: environment, penetration, sophistication and accountability. These indices were created for the OIC and can be recalculated annually.

The seventh article, “Endogenous Monetary Transmission in Islamic Financial Economics” projects an Islamic economic theory of endogenous money to pursue the financing of projects holding goals of economic stability and performance. Among these are 100% circulation of bank-savings (that banks otherwise hold back for liquid spending) and 100% maintenance of the Reserve Requirement Monetary System in Islamic monetary transmission. Consequently, debt reduces to zero; the market transformation leads to an increase in stake holding via the diversification of projects, the portfolio diversification of financing instruments (mobilizes monetary units as micro-money projects), and the increase in stake holding (makes the real output level statistically elastic). Thereby, prices stabilize in the absence of all forms of interest rates. The result is the generalized inter-causality among the endogenous inter-variable relations.

The eighth article, “Renminbi in ASEAN Economy: How ASEAN responds to Renminbi Internationalization” explains why the IMF included the Chinese Yuan Renminbi in its Special Drawing Right since the end of 2015. Seeing the rising significance of Renminbi in international currency, Chiang Mai Initiative of Multilateralization (CMIM) observes the internationalization of the currency and relation to the Asian financial crisis. Specifically, the article finds a significant impact of Renminbi internationalization on the movement of ASEAN member exchange rates, especially after ASEAN China FTA (ACFTA). Empirical evidence from the article suggests increasing trade between ASEAN nations and China will further increase Renminbi’s effect in the ASEAN foreign exchange market.

As SESRIC, we will continue our efforts to make our Journal of Economic Cooperation and Development an opened window for academics and researchers within as well as outside the OIC members for sharing their valuable work and studies with all who are interested in the OIC member countries and the Islamic world at large through providing them with an opportunity to keep pace with the socio-economic developments in OIC member countries in the light of the changes taking place in the world economy.

Nebil DABUR

Editor-in-chief

Articles of the Journal of Economic Cooperation and Development, Vol.40 No.3 (2019)