THE MEDIATING EFFECT OF EASE OF DOING BUSINESS ON THE RELATIONSHIP BETWEEN PUBLIC DEBT AND INFRASTRUCTURE IN ARAB COUNTRIES

Abstract

This study examines how the ease of doing business in Arab countries mediates the relationship between public debt and infrastructure. According to previous research, one way to encourage the start-up of new infrastructure projects that boost economic growth and reduce debt build-up is to improve the business environment. The results showed that the relationship between public debt and infrastructure is fully mediated by the ease of doing business, using panel data for 19 Arab countries from 2000 to 2020. Based on the general least squares method, infrastructure was statistically negatively affected by public debt. By reducing the harmful effects of public debt on infrastructure, the study confirms that the ease of doing business leads to a more positive relationship between the two. This is due to the fact that a business-friendly environment can attract investment and boost the economy, which can help counteract the harmful effects of public debt on infrastructure. The paper provides recommendations for policymakers in Arab countries to create a favorable business environment that increases investment in infrastructure and reduces the effects of public debt. They need to promote good governance, which would curb corruption, strengthen institutions, and implement reforms to improve the ease of doing business, as some Arab countries still lag behind in many aspects of doing business, hindering business prosperity, proper infrastructural investment, and debt sustainability.