The spillover effects of the Syrian crisis on Lebanon’s economy :a cross border analysis between Jordan and Turkey -

Abstract

The ongoing conflict in Syria has imposed several political, social, and economic challenges to the Middle East region. As a result of the Syrian crisis, the large-scale and rapid influx of refugees to neighboring countries, including Lebanon, Jordan, and Turkey has caused extensive pressure on host economies with varying degrees of negative spillover effects. The Syrian crisis has contributed to increasing Lebanon’s vulnerability as a country, through restraining its overall macroeconomic performance. Spillover effects include but are not limited to, successive losses to the pillar economic sectors such as tourism and real estate, losses in investment opportunities, rising unemployment and inflation rates, limited economic transactions, and disrupted trade routes which impacted exports. Moreover, the regional turmoil caused by the Syrian crisis has exacerbated Jordan’s already low economic growth and fragile fiscal stance. Furthermore, the macroeconomic analysis of Turkey’s economy shows that Turkey’s slowdown in economic growth cannot be fully attributed to the spillover effects of the Syrian crisis. Turkey’s economy has been affected by several shocks at once, inflicting slowdown in economic growth. Empirical evidence in this thesis shows that Lebanon’s economy suffered the most from the negative spillovers of the Syrian crisis in comparison to all other political external and internal shocks that hit Lebanonbetween the years 1980 to 2013. In addition, Lebanon’s economy witnessed the largest slowdown in economic growth vis-à-vis Jordan and Turkey as a result of the Syrian crisis. Chapter I of this thesis highlights an over view of the thesis topic. Chapter II presents a literature review on the regional political instability and its relationship to economic growth. The thesis then presents thoroughly, in chapter III, the context of the crisis and its impact on Lebanon’s economy by analyzing the economic repercussions of Lebanon’s key sectors and macr