Financial Capital Inflows, Manufacturing Exports and Economic Growth in Palestine: A Threshold Regression Analysis

Aims: The study examined the Optimal Level of the Financial Capital Inflows and Manufacturing Exports, Economic Growth in Palestine. Annual data from the (2000-2018) to Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), cross-border borrowing from the World Bank (Components Of Financial Capital Inflows) Financial Sector Development (FSD) real GDP (RGDP) and Manufacturing Exports (MEX) were no different from other Production Sources, Palestinian Monetary Authority (PMA) and Ministry of National Economy (MONE), Ministry of Finance and Planning (MOFP), Palestinian Central Bureau of Statistics (PCBS), Statistical Bulletin while data on Gross Capital Formation (GCF) and Human Capital (HC) was the source of the World Bank also curvature.

Study Design: Cross-Sectional Survey Research (Qualitative & Quantitative).

Place and Duration of the Study: Various Governmental Organizations in Palestine, between the periods (2000-2018).

Methodology: Quantitative and Qualitative specification model, the equations used to examine the Optimal Level, impact and the relationship of Financial Capital Inflows and Manufacturing Exports on Palestinian Economic Growth, Threshold Regression Analysis was used to detect and verify the Optimal Level of Financial Capital Inflows by analyzing the data that have been collected from the Electronic Sources which available on the official websites of Governmental Organizations for the period (2000-2018). The methodology of the study revealed the relationship of the Optimal Level of Financial Capital Inflows with Manufacturing Exports on Economic Growth in Palestine. Data collection process and data analysis techniques employed to achieve the current study objective.

Results: The study found that the optimization results showed that the Financial Capital Inflows of (CINF) Threshold value (21.77%) with a coefficient of (7.74) per year is the Optimal Level of Financial Capital Inflows in Palestine the Threshold Point Manufacturing Exports to any Financial Capital Inflows (CINF) of the Threshold value of Manufacturing Exports in Palestine. The study concludes that the Optimal Level for Financial Capital Inflows to Economic Growth is (21.77%); any Threshold Level above the sustainable level of Economic Growth will be adversely affected in Palestine.

Conclusion: Findings of the study found that the Flow of Financial Capital Threshold exists for the Manufacture of Exports, and therefore recommends that excessive Financial Capital Inflows should be avoided in the country so that it does not make the conduct of Monetary Policy difficult, while the need of Financial Capital Inflows must be monitored well and directed to sectors (such as Industry, Agriculture, Mining and Quarrying) that have the absorptive capacity for them.