nep-ara New Economics Papers
on Arab World
Issue of 2009‒11‒14
eleven papers chosen by
Quentin Wodon
World Bank

  1. Oil Exports and the Iranian Economy By Esfahani, Hadi Salehi; Mohaddes, Kamiar; Pesaran, Hashem
  2. Oil-rent Boom in Iran?  By Martin Beck
  3. Fiscal variables and bond spreads – Evidence from Eastern European countries and Turkey. By Christane Nickel; Philipp C. Rother; Jan C. Rülke
  4. An Empirical Glimpse on MSEs Four MENA Countries By Weshah Razzak
  5. The effect of Sovereign Wealth Funds’ investments on stock markets By Hélène Raymond
  6. The implementation of an Environmental Management System in a North-African Local Public Administration: the case of the City Council of Marrakech (Morocco) By Tiberio Daddi; Marco Frey; Fabio Iraldo; Bouchra Nabild
  7. Trade Liberalization in T&C: An Overview of the Welfare Effects By Dimitrios Dadakas; Stelios D Katranidis
  8. Children of Immigrants in the Labour Markets of EU and OECD Countries: An Overview By Thomas Liebig; Sarah Widmaier
  9. Geographic oil concentration and economic growth – a panel data analysis By Nuno Torres; Óscar Afonso; Isabel Soares
  10. On the GCC Currency Union By Weshah Razzak
  11. Out of Sight, Out of Mind: Migration, Entrepreneurship and Social Capital By Wahba, Jackline; Zenou, Yves

  1. By: Esfahani, Hadi Salehi (University of Illinois at Urbana-Champaign); Mohaddes, Kamiar (University of Cambridge); Pesaran, Hashem (University of Cambridge)
    Abstract: This paper develops a long run growth model for a major oil exporting economy and derives conditions under which oil revenues are likely to have a lasting impact. This approach contrasts with the standard literature on the "Dutch disease" and the "resource curse", which primarily focus on short run implications of a temporary resource discovery. Under certain regularity conditions and assuming a Cobb Douglas production function, it is shown that (log) oil exports enter the long run output equation with a coefficient equal to the share of capital. The long run theory is tested using a new quarterly data set on the Iranian economy over the period 1979Q1-2006Q4. Building an error correction specification in real output, real money balances, inflation, real exchange rate, oil exports, and foreign real output, the paper finds clear evidence for two long run relations: an output equation as predicted by the theory and a standard real money demand equation with inflation acting as a proxy for the (missing) market interest rate. Real output in the long run is shaped by oil exports through their impact on capital accumulation, and the foreign output as the main channel of technological transfer. The results also show a significant negative long run association between inflation and real GDP, which is suggestive of economic inefficiencies. Once the effects of oil exports are taken into account, the estimates support output growth convergence between Iran and the rest of the world. We also find that the Iranian economy adjusts quite quickly to the shocks in foreign output and oil exports, which could be partly due to the relatively underdeveloped nature of Iran's financial markets.
    Keywords: growth models, long run relations, Iranian economy, oil price, foreign output shocks, error correcting relations
    JEL: C32 C53 E17 F43 F47 Q32
    Date: 2009–10
  2. By: Martin Beck (GIGA Institute of Middle East Studies)
    Abstract: The present article aims to analyze the  effects of high oil prices since 2003 on  Iran. The theoretical basis of the anal ysis is the rentier state approach, the  basic element of which is that rents are  at the free disposal of the rentier. Em pirically, the paper examines the issue  areas of foreign policy, domestic policy  and economic policy. After proving that  the oil price—despite fluctuations—has  constantly been at a high level in the f irst decade of the twenty-first century,  the discussion demonstrates that Iran h as used the increased rent in-come to su pport a populist policy. In terms of eco nomic policy, the regime has pursued a r edistributive strategy. The country’s fo reign policy, particularly the ostentati ously pursued atomic program, has been v ery expensive since it provoked sanction s whose costs were initially balanced on ly by high rent income. Yet, in his firs t term, Ahmadinejad failed to prepare Ir an for the situation that has occurred a s a result of the global financial crisi s: the redistributive policy of the regi me has meant that an oil price below US$ 70 or US$75 now constitutes a severe cha llenge for the Iranian state budget.
    Keywords: Iran, oil, rentier-state approach, domestic policy, economic policy, foreign policy 
    Date: 2009–10
  3. By: Christane Nickel (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Philipp C. Rother (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Jan C. Rülke (WHU – Otto Beisheim School of Management, Burgplatz 2, D-56179 Vallendar, Germany.)
    Abstract: We investigate the impact of fiscal variables on bond yield spreads relative to US Treasury bonds in the Czech Republic, Hungary, Poland, Russia and Turkey from May 1998 to December 2007. To account for the importance of market expectations we use projected values for fiscal and macroeconomic variables generated from Consensus Economics Forecasts. Moreover, we compare results from panel regressions with those from country (seemingly unrelated regression) estimates, and conduct analogous regressions for a control group of Latin American countries. We find that the role of the individual explanatory variables, including the importance of fiscal variables, varies across countries. JEL Classification: C33, E43, E62, H62.
    Keywords: Budget deficits, determination of interest rates, fiscal policy, Eastern European countries.
    Date: 2009–10
  4. By: Weshah Razzak
    Abstract: The Economic Research Forum (ERF) produced a one-off survey of micro & small private enterprises (MSE) in a number of Middle East and North African countries (MENA). It contains sufficient information to fit a production function and additional information about the owner’s education type; the scope of the market; and the type of technology. Further, it provides information about perceived constraints to production. We test the effect of these factors on technical progress. We believe that empirical research of policy issues can help promote the making of ‘evidence-based policies’ in the MENA countries.
    Keywords: Micro-small private enterprise; production function; stochastic dominance.
    JEL: C13 C21 D24
    Date: 2009–09–30
  5. By: Hélène Raymond
    Abstract: This study assesses the reaction of stock markets, when Sovereign Wealth Funds (SWFs) announce that they have taken a stake in a listed company. It adds useful empirical results to the debate on the effect of SWFs on financial markets, which remains so far largely reliant on guess work. We perform an event study using a sample of 50 SWF acquisitions of equity stakes in listed companies around the world, from May 2005 to April 2008. According to our results, the announcement of an acquisition by a SWF has a transitory positive impact on the share price of the target company, but there is no lasting effect. This stands in contrast to the results obtained in the academic literature for the investments of private equity funds, and to a lesser extent pension funds. The tests conducted on a sub-sample of announcements targeting banks only made during the subprime crisis (between July 2007 and April 2008) do not exhibit more lasting effects. This may suggest that markets are not convinced that SWFs alone are capable of restoring the position of the banks concerned. These results are however subject to some caveats, and notably, the relatively small size of the sample as well as a selection bias in favour of transparent SWFs, due to the lack of information on other funds.
    Keywords: Sovereign Wealth Funds, Event Study.
    JEL: G14 G34
    Date: 2009
  6. By: Tiberio Daddi (Sant’Anna School of Advanced Studies, Pisa, Italy); Marco Frey (Sant’Anna School of Advanced Studies, Pisa, Italy); Fabio Iraldo (Sant’Anna School of Advanced Studies, Pisa, Italy); Bouchra Nabild (International Projects and Training Departments, City Council of Marrakech, Marrakech, Morocco)
    Date: 2009–05–01
  7. By: Dimitrios Dadakas (Department of Economics, University of Macedonia); Stelios D Katranidis (Department of Economics, University of Macedonia)
    Abstract: This paper examines the effects of trade liberalization on cotton-yarn producer’s welfare in Greece, Portugal, Spain and Turkey. We perform a comparative analysis of the price-induced welfare effects using multi-market theory, a single-market approach and bootstrapping techniques. Results show that after the 1995 implementation of the plan for the gradual elimination of quotas (Agreement on Textiles and Clothing, ATC, 1995-2005) producers in all four countries suffered substantial welfare losses.
    Keywords: VMulti-Market, Single-Market Approach, Applied Welfare Analysis, Bootstrap, Textiles and Clothing, Trade Liberalization, MFA, ATC.
    JEL: C39 D60 F10
    Date: 2009–11
  8. By: Thomas Liebig; Sarah Widmaier
    Abstract: This document provides a first comparative overview of the presence and outcomes of the children of immigrants in the labour markets of OECD countries, based on a collection of data from 16 OECD countries with large immigrant populations. Its key findings are the following: • In about half of all OECD countries, children of immigrants - both native-born offspring of immigrants and foreign-born who immigrated before adulthood with their parents - account for ten or more percent of young adults (aged 20-29) in the labour market. • Most children of immigrants have parents from low- and middle-income countries, and the share with parents from such countries is larger among foreign-born children than among the nativeborn offspring of immigrants. This is a result of the diversification of migration flows over the past 20 years. • Among the native-born children of immigrants in European OECD countries, Turkey is the single most important country of parental origin, followed by Morocco. When comparing the countries of parental origin for the native- and the foreign-born children of immigrants, one observes in the European OECD countries a strong decline in the importance of the origin countries of the post-World War II wave of labour migration, in particular Turkey but also Morocco, Italy, Portugal and Pakistan. • In all countries except Germany and Switzerland, a large majority of the native-born children of immigrants have obtained the nationality of their countries of residence. • The OECD’s Programme for International Student Assessment (PISA) has demonstrated lower assessment results for the children of immigrants in most European OECD countries. There are close links between PISA outcomes and educational attainment levels. In the countries in which children of migrants have large gaps in PISA-scores vis-à-vis children of natives, children of immigrants are also strongly overrepresented among those who are low-educated. • One observes a clear difference between the non-European OECD countries (Australia, Canada, New Zealand and the United States) on the one hand and European OECD countries on the other hand. In the former, the children of migrants have education and labour market outcomes that tend to be at least at par with those of the children of natives. In the European OECD countries (with the exception of Switzerland), both education and labour market outcomes of the children of immigrants tend to be much less favourable. • Part of the differences in labour market outcomes observed in most European OECD countries is due to the fact that the children of immigrants tend to have a lower educational attainment than the children of natives. However, significant gaps remain in many of these countries even after correcting for differences in average educational attainment. • The remaining gaps are particularly large for the offspring of migrants from Turkey and from certain non-OECD countries such as Morocco. In all countries, children with parents from middle-and low-income countries have lower outcomes than children of immigrants from highincome countries. The differences are particularly large for young immigrant women. • On average over the OECD countries for which data are available, the children of immigrants have an unemployment rate that is about 1.6 times higher than that of the children of natives, for both genders. The children of immigrants also have lower employment rates – the gaps compared with the children of natives are about 8 percentage points for men and about 13 percentage points for women. • For women, one observes much better results for the native children of immigrants than for young immigrants, suggesting that having been fully raised and educated in the country of residence brings some additional benefit. However, this is not observed for men, where the native-born children of immigrants do not seem to fare better than the young immigrants, particularly after accounting for the lower educational attainment of the latter group. • The less favourable picture for the female children of migrants compared with their male counterparts is less clear-cut after controlling for socio-demographic characteristics, in particular marital status and number of children. Part of the “double disadvantage” for the female offspring of immigrants seems to be due to the fact that in the age range under consideration (20-29 years), they are overrepresented among those who are (already) married and have children. Indeed, once controlling for this, native-born women who have parents from the Maghreb region or Southern Europe, as well those with Turkish parental origin, tend to have higher employment rates - relative to comparable natives - than their male counterparts. • When in employment, children of immigrants are in occupations similar to those of the children of natives. They are also widely spread throughout the economy, but tend to remain underrepresented in the public sector.<BR>Les principales conclusions qui s’en dégagent sont résumées ci-dessous. • Dans la moitié environ de l’ensemble des pays de l’OCDE, les enfants d’immigrés (aussi bien ceux nés dans le pays hôte de parents immigrés que ceux nés à l’étranger et qui ont immigré avec leurs parents avant d’avoir atteint l’âge adulte) représentent au moins dix pour cent des jeunes adultes (jeunes âgés de 20 à 29 ans) présents sur le marché du travail. • Les parents des enfants immigrés sont le plus souvent originaires de pays à revenu faible ou intermédiaire, et la proportion d’enfants dont les parents sont dans ce cas est plus forte parmi ceux qui sont nés à l’étranger que parmi les enfants nés dans le pays hôte. • Parmi les enfants nés dans un pays européen de l’OCDE de parents immigrés, ceux dont les parents sont originaires de Turquie sont les plus nombreux, suivis des enfants d’origine marocaine. Quand on compare les pays d’origine des parents immigrés d’enfants nés dans le pays hôte et d’enfants nés à l’étranger, on observe, dans les pays européens de l’OCDE, un fort recul de l’importance des pays d’origine correspondant à la vague de migration de travail de l’après- Deuxième Guerre mondiale. Cette observation concerne notamment la Turquie, mais aussi le Maroc, l’Italie, le Portugal et le Pakistan. • Dans tous les pays hormis l’Allemagne et la Suisse, une grande majorité des enfants nés sur le territoire de parents immigrés ont obtenu la nationalité de leur pays de résidence. • Le Programme international de l’OCDE pour le suivi des acquis des élèves (PISA) a démontré que, dans la plupart des pays européens de l’Organisation, les enfants d’immigrés obtenaient de piètres résultats lors des évaluations. Il existe un lien étroit entre les acquis scolaires mesurés par PISA et les niveaux d’études atteints. Dans les pays où l’on relève d’importantes disparités entre les enfants d’immigrés et les enfants de parents autochtones du point de vue des notes obtenues lors des tests PISA, les premiers sont aussi fortement surreprésentés parmi les personnes peu instruites. • On relève une nette différence entre les pays non européens de l’OCDE (Australie, Canada, États-Unis et Nouvelle-Zélande), d’une part, et les pays européens de l’Organisation, d’autre part. Dans le premier groupe, les enfants d’immigrés affichent généralement, au regard de l’éducation et de l’emploi, des résultats au moins égaux à ceux des enfants de parents autochtones. Mais dans les pays européens de l’OCDE (à l’exception de la Suisse), les résultats des enfants d’immigrés au regard de l’éducation et de l’emploi sont généralement moins bons.
    JEL: J13 J15 J21 L29
    Date: 2009–10–29
  9. By: Nuno Torres (Faculdade de Economia, Universidade do Porto); Óscar Afonso (CEFUP, OBEGEF and Faculdade de Economia, Universidade do Porto); Isabel Soares (CEFUP, Faculdade de Economia, Universidade do Porto)
    Abstract: Given a panel of oil producing countries, we show that a higher oil concentration is associated with an increase in economic growth through capital efficiency in: (i) countries with medium and low income per head from East Asia & Pacific and Latin America & the Caribbean, classified as followers in terms of technology-convergence clubs; (ii) countries with high income inequality. In our view, the overall results reflect the broader scope for factor efficiency increases in less developed countries arising from the oil industry, which is characterised by a highly globalised know-how.
    Keywords: Energy; Economic growth; Panel data
    JEL: C23 O13 O47 O50 Q40
    Date: 2009–11
  10. By: Weshah Razzak
    Abstract: Essentially, the impact of the currency union on member countries depends on whether the common currency area is optimal in the sense that the effect of the asymmetric shocks is small, Mundell (1961). Typically, researchers use VAR of different types to analyze the data. For robustness, we use different methodologies. First, we use different estimators to estimate a small textbook model for the panel of the Gulf Cooperation Council countries (GCC) from 1970 to 2006, where the short-run equilibrium real output and the real exchange rate are determined by the intersection of the assets and goods markets equilibrium schedules. And the central bank fixes the exchange rate by keeping the money supply at a level where the domestic interest rate is equal to the foreign interest rate. Then we test for symmetry using the nonparametric Triples test, Randles et al. (1980). Third, we introduce a nonparametric multivariate statistic to test whether the variances of the shocks (the conditional variance) are equal across countries.
    Keywords: Optimum Currency Area, asymmetrical shocks and conditional variance
    JEL: F31 P28 C13 C33
    Date: 2009–02–11
  11. By: Wahba, Jackline (University of Southampton); Zenou, Yves (Stockholm University)
    Abstract: The aim of this paper is to investigate whether return migrants are more likely to become entrepreneurs than non-migrants. We develop a theoretical search model that puts forward the trade off faced by returnees since overseas migration provides an opportunity for human and physical capital accumulation but, at the same time, may lead to a loss of social capital back home. We test the predictions of the model using data from Egypt. We find that, even after controlling for the endogeneity of the temporary migration decision, an overseas returnee is more likely to become an entrepreneur than a non-migrant. Although migrants lose their original social networks whilst overseas, savings and human capital accumulation acquired abroad over-compensate for this loss. Our results also suggest that social networks have no significant impact on becoming entrepreneurs for returnees but matter for non-migrants.
    Keywords: social capital, entrepreneurship, selection, savings
    JEL: L26 O12 O15
    Date: 2009–11

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