nep-ara New Economics Papers
on Arab World
Issue of 2010‒02‒27
eleven papers chosen by
Quentin Wodon
World Bank

  1. Elasticities of Turkish Exports and Imports By Ayla Ogus; Niloufer Sohrabji
  2. Islamic Finance: Debt versus Equity Financing in the Light of Maqasid al-Shari'ah By Eddy Yusof, Ezry Fahmy; Kashoogie, Jhordy; Anwar Kamal, Asim
  3. Alternative Pricing Mechanisms for Islamic Financial Instruments: Economic Perspective By Saba, Irum; Alsayyed, Nidal
  4. Institutional Analysis to explain the Success of Moroccan Microfinance Institutions By Virginie Allaire; Arvind Ashta; Laurence Attuel-Mendes; Karuna Krishnaswamy
  5. Economic Pricing Mechanisms for Islamic Financial Instruments: Ijarah Model By Saba, Irum; Alsayyed, Nidal
  6. Turkey's Party System and the Paucity of Minority Policy Reform By Evangelos Liaras
  7. Herding in a Shifting Mediterranean Changing agro-pastoral livelihoods in the Mashreq & Maghreb region By Michele Nori; Mohamed El Mourid; Ali Nefzaoui; Pamela Giorgi
  8. The United Arab Emirates: Some Lessons in Economic Development By Nyarko, Yaw
  9. A Strategic Orientation Model for the Turkish Local e-Governments By Aykut, Arslan
  10. Trade Across the Mediterranean: An exploratory investigation By Nadav Halevi; Ephraim Kleiman
  11. A Holistic View of Legal Documentation from Shari'ah Perspective By Eddy Yusof, Ezry Fahmy

  1. By: Ayla Ogus (Department of Economics, Izmir University of Economics); Niloufer Sohrabji (Department of Economics, Simmons College)
    Abstract: The Turkish current account has been exploding in the last few years leading to concerns of a crisis. One of the primary factors identified in the rising deficits is the appreciating lira. In addition, income elasticity of exports and imports can also shed light on continuing trade deficits. In this paper we analyze exchange rate and income elasticity of Turkish imports and exports. We find a significant gap between domestic and foreign income elasticities (for exports and imports respectively) which points to a threat of growing trade deficits. In addition we also find that the exchange rate elasticity is negative for both Turkish exports and imports. This indicates that depreciation of the Turkish lira will have a negative effect on both imports and exports.
    Keywords: Cointegration; current account deficits; exchange rate and income elasticity, Turkey
    JEL: F32 F41
    Date: 2009–11
  2. By: Eddy Yusof, Ezry Fahmy; Kashoogie, Jhordy; Anwar Kamal, Asim
    Abstract: A hot topic among Islamic economists is the debt versus equity debate. Which of the two are more in line with justice and equality? Which of them is more productive in fulfilling the greater objectives of the Shariah? This paper is divided into sections. After the introduction, it is followed by problem statement as well as objective of the study. After that, section 4 briefs the research questions for answering the analysis in this paper. Section 5 deals with discussion obtained from literature review whichhighlights important issues regarding Maqasid Al-Shari’ah in term of justice and equality vis-àvis the current practice as well as ideal model of Islamic banking and finance. Finally, this paper ends up with conclusion.
    Keywords: productivity; justice; Equality; Islamic finance; debt financing; equity financing; maqasid shariah
    JEL: D20 D40
    Date: 2009–04
  3. By: Saba, Irum; Alsayyed, Nidal
    Abstract: The Islamic banking industry has been trying for the last two decades to extend its outreach to expand its operation business and services in a comparable zone to conventional banking. This paper discusses one of the important hurdles in the growth of Islamic banking which is the use of KIBOR as benchmark for pricing the Islamic banking products. Muskun home financing product of BankIslami Pakistan Limited is used in this paper to elaborate the pricing and benchmarking of product, spread between the conventional interest rate and Islamic profit rate as well as the alternative product pricing mechanism to be used by Islamic banks for this product. Details of Muskun home financing product are discussed in this paper in addition to the marketing strategy, market approach, product development, and all other relevant processes.
    Keywords: Islamic Economics; KIBOR; Benchmarking; Pricing; Riba based system; Confidence
    JEL: C51 Z12 E31 A10 C01
    Date: 2010–02–01
  4. By: Virginie Allaire (CEREN, Burgundy School of Business (Groupe ESC Dijon-Bourgogne), France); Arvind Ashta (Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and CEREN, Burgundy School of Business (Groupe ESC Dijon-Bourgogne), France); Laurence Attuel-Mendes (CEREN, Burgundy School of Business (Groupe ESC Dijon-Bourgogne), France); Karuna Krishnaswamy
    Abstract: This paper looks at whether Morocco meets the usual criteria of a country where MFIs can succeed and what distinguishes Morocco from its North African neighbors (Algeria, Tunisia, Libya and Egypt) where a priori the culture is similar even though institutions may be different. The paper uses the similarities and differences of these five countries to identify cultural, institutional, economic and geographic factors which explain why Microfinance in particular and development in general arrives sooner in some environments than in others. The objective of the research is to identify controllable institutional factors which can be introduced in regulation to enable Microfinance to succeed in a country. We used a case study approach combined with a little bit of correlation analysis. The case study approach is the most adapted to studying small samples in more detail. The success of Microfinance is linked to population density, smallness of a country's geographical size and its poverty as well as the amount of international donor funds it has received. The availability of oil exports as revenues may lead to a delay in developing microfinance. Establishing a specific legal framework for Microfinance, such as in Morocco, may help foster the growth of Microfinance. The existence of Apex organizations for centralizing international aid and redistributing funds may in fact lead to lower donor participation since their choices are reduced and an extra level of bureaucratic costs is imposed. The results also indicate the need for a better quality database than that currently provided by the MIX. Biases may come in from the small sample size as well as from the lack of data on Libya. Future research may focus on correlation with violence, corruption, women's rights, political risk and economic sanctions. The findings would lead microfinance institutions to lobby for specific laws, more initial direct donor funding, less government apex distribution and better information databases. This kind of comparative institutional analysis has not been performed, at least for this region.
    Keywords: Institutional analysis, regulation, microfinance, North Africa
    Date: 2009–06
  5. By: Saba, Irum; Alsayyed, Nidal
    Abstract: The Islamic Economic and banking industry have been trying for the last two decades to extend its outreach to expand its operation business and services in a comparable footing to conventional banking. This paper discusses one of the important hurdles in the growth of Islamic banking which is the use of KIBOR as benchmark for pricing the Islamic banking products. Muskun home financing product of BankIslami Pakistan Limited is used in this paper to elaborate the pricing and benchmarking of product, spread between the conventional interest rate and Islamic profit rate as well as the alternative product pricing mechanism to be used by Islamic banks for this product. Details of Muskun home financing product are discussed in this paper in addition to the marketing strategy, market approach, economic product development, and all other relevant processes.
    Keywords: Islamic Economics; KIBOR; Benchmarking; Pricing; Riba based system; Confidence
    JEL: C13 Z12 A10 C01
    Date: 2010–02–01
  6. By: Evangelos Liaras
    Abstract: The purpose of this paper is to explore the question of small and incremental reform in Turkish minority policies over the last two decades, contrasting with the dramatic economic, social, and political changes that the country has experienced over the same period. The main focus will be on two partly overlapping groups living in Turkey (Alevis and Kurds); comparison with other Southern European countries will be made as background reference. The reason for this focus is analytical: these two groups are structurally different from minorities found in Italy or Greece in that they are both large enough to carry great electoral weight and politically salient enough to affect Turkey's EU accession prospects. Minority policy is an often overlooked realm of public policy, either because it is considered too sensitive or too case-specific, as opposed to fiscal, labor, family, and immigration policy, which, at least in the European context, are now typically examined and compared by scholars on a more transnational framework. However, minority policy broadly defined (as the recognition and treatment of sections of the population identified as belonging to a special cultural heritage) touches upon a number of diverse policy areas including civil rights, education, regional development, relations between religion and state, language, culture, and national security. In Turkey minority policy in official discourse has historically been linked to the non-Muslim minorities protected by the Treaty of Lausanne, whereas Alevis and Kurds were traditionally accorded no special recognition under the Kemalist Republic. The first part of the paper attempts to theoretically situate minority policy in the context of competitive party politics. What is puzzling about Turkey is why given a climate of increased democratization and confidence after the suppression of the PKK insurgency, the Turkish party system has not been more responsive to the long-standing grievances of Kurds and Alevis. Partly based on existing literature, the author posits that a constellation of factors is necessary for policy reform on minority issues to proceed in a democratic system: the mobilization of the minority group(s) in question and either high external pressure on the state to satisfy minority demands or significant electoral competition for the minority's votes or participation in government of a party that monopolizes the minority vote and is ideologically committed to its agenda. The second part of the paper briefly discusses the history of state attitudes towards Kurds and Alevis in Turkey, as well as more recent developments including the reforms on Kurdish language rights, the abortive Çamuroglu recommendations regarding Alevi pious foundations, DTP's entry in parliament, and the constitutional amendment process launched by AKP. The third and final part of the paper explains why Turkey's party system for a long time lacked the necessary preconditions for more groundbreaking policy changes, underlining the importance of external pressure from the EU as an engine for reform.
    Keywords: Europeanization
    Date: 2009–11–15
  7. By: Michele Nori; Mohamed El Mourid; Ali Nefzaoui; Pamela Giorgi
    Abstract: Pastoralism is a characteristic livelihood system for the whole Mediterranean basin. From Morocco to Turkey, from Sardinia to Libya, herding societies are a common feature of all countries and civilisations that have inhabited the region. Though the material and symbolic wealth of pastoral groups is an integral part to the Mediterranean livelihood as well as cultural systems (i.e. milk, lambs, transhumance, etc…), these societies have long suffered various forms of socio-political and economic marginalisation. While the lands and environments herders insisted upon have become a main target for modernization policies, from natural reserve to farming expansion, from mining exploitation to livestock market off-takes, their rights have been seldom acknowledged and their technical skills and institutional capacities hardly recognized. Recently, low population density, remoteness and political marginality have made pastoral areas the prime targets for state retrenchment under Structural Adjustment Programs and cuts to public budgets. On the other side important potentials exist for a fairer development of these communities, such as the increasing consumption demand for animal proteins, together with the recognition of pastoralism as an environmental-friendly natural resource management, and processes of enhanced autonomy and local participation in political decision-making offered by recent reforms implying decentralisation and devolution. During the last decades, access to and control of resources in pastoral areas have gone through specific transformation processes, which have reshaped to a large extent pastoralists dependence on their natural resource base and enhanced integration into state and market dynamics. Yet the outcomes of these processes are yet to prove beneficial to pastoral communities, whose sense of marginalisation, disillusionment and resentment towards state or regional institutions is an important element that helps explaining to an extent processes of political radicalisation in many pastoral regions. As a result, pastoral groups seem increasingly exposed to climatic vagaries, increasingly trapped in the vicious circle characterised by high levels of food insecurity, conflict and environmental degradation. Within the climate change framework the vulnerability of these communities to extremes climatic events, i.e. drought, is being increasingly acknowledged (WISP, 2007). This paper addresses the dynamics perceived, the problems faced and the applied coping strategies by some pastoral communities inhabiting the Middle East North Africa (MENA) region. With case studies from Morocco and Tunisia and a wider regional analysis which also include cases from Jordan, Syria and Palestine, this paper addresses the shifting vulnerability of pastoral communities under changing environmental and socio-political domains. An innovative participatory tool, the historical livelihood matrix is presented and brought into discussion as an appropriate tool which enables discussing livelihood dynamics in an historical perspective, taking into account the gender as well as generational perspectives. The research work has been undertaken within the ICARDA Maghreb and Mashreq program, complemented with some other development works undertaken by the author in the region with the NGO Ucodep.
    Keywords: participation; risk-sharing mechanisms; institutionalisation; gender policy; Mediterranean
    Date: 2009–10–15
  8. By: Nyarko, Yaw
    Abstract: Oil was discovered in the United Arab Emirates (UAE) just 50 years ago. During that time, UAE has been able to transform itself into a rapidly modernizing country, which is fast becoming a major economic hub and a key player on the international economic landscape. This paper discusses a number of aspects of the development strategy of the UAE that contributed to its phenomenal development: (i) the political system, which has resulted in a perception of stability and minimal political risk, encouraging investment; (ii) oil; (iii) development strategies that have resulted in a very dynamic business environment; (iv) open importation of foreign skills and management; (v) labour policies that have enabled the immigration of vast numbers of foreign lower-skilled workers. There are, of course, also concerns for the future, and indeed each of the five positive attributes listed above has a flip side which is a potential major challenge for the future.
    Keywords: role models, United Arab Emirates, success
    Date: 2010
  9. By: Aykut, Arslan
    Abstract: Increased environmental uncertainty and complexity along with budget constraints requires public organizations to manage strategically as never before. The environments of public organizations have become increasingly turbulent and more firmly interconnected. During the past two decades, governments have innovated new management tools such as strategic planning, outsourcing, and performance measurement to deal with complex governance and networks to provide their public services. Meanwhile, the drive to implement e-government has resulted in the formulation of many e-government visions and strategies, driven by their own sets of political, economic, and social factors and requirements. With this regard, recent developments in e-service provision of Turkish Local e-Governments deserve empirical and well-structured research. Building on the recent literature, this study draws a strategic orientation framework and tests it by analyzing the contents of strategic documents of 114 Turkish Local e-Governments.
    Keywords: Turkish Local e-Governments; e-Government Strategy; Strategic Orientation Model;
    JEL: O1 O18 H1 H7 O3
    Date: 2009–03
  10. By: Nadav Halevi; Ephraim Kleiman
    Abstract: This paper examines trade across the Mediterranean against the background of the efforts to foster both North-South and intra-South trade flows as engines of growth. We first consider the shares of these regions (and of the countries constituting them) in the trade of each other as indicators of trade importance; and relative trade intensity indices – the ratio of these shares to the corresponding ones in the trade of the rest of the world – as measures of trade affinity and as means of identifying 'natural' trade partners. Because of the sheer size disparity, trade with the North-Med is more important to the South-Med than the other way round. But both regions display trade affinities with each other, making them natural trading partners, though there are wide disparities between individual countries within each region. Insofar as being natural trading partners forms a criterion for economic integration, there are promising prospects for some form of integration between the countries on the North and the South littorals of the Mediterranean. Contrary to the popular view of Arab South-Med trade being dominated by cultural, religious and linguistic commonalities, our findings show that geography still matters: the Arab South-Med affinity with the group of EU countries not lying on the Mediterranean littoral is much lower than with those that do. Arab commonality also seems to be more important in the trade of the Levant than in that of the Maghreb, whose trade affinities with its former colonial powers suggest the colonial heritage there to be still of importance. More generally, the differences observed here between the Maghreb and the Arab Levant have relevance to the EU's Barcelona Process policy, which encourages the formation of a South Mediterranean Free Trade Area. The findings of our study suggest that though the Arab Levant constitutes indeed a natural trading area, this is not as true for the region as a whole.
    Date: 2009–12–15
  11. By: Eddy Yusof, Ezry Fahmy
    Abstract: The legal documentation having several features tends to make legal writing formal. This formality can take the form of long sentences, complex constructions, archaic and hyper-formal vocabulary, and a focus on content to the exclusion of reader needs. Some of this formality in legal writing is necessary and desirable, given the importance of some legal documents and the seriousness of the circumstances in which some legal documents are used. Yet not all formality in legal writing is justified in the Shariah point of view. It may sometimes to the extent that formality hinders reader comprehension, and do not reflect clear communication. This paper will explore some clauses of the legal documentation and analyze it check and balance from the Shariah perspective. In the second part of this paper, we will investigate some of controversial clauses that are deemed as prohibition elements. This paper conclude by proposing some suggestion in Islamizing the currently practice legal documentation in order to incorporate with the Shariah requirement.
    Keywords: Legal documentation; rights and liabilities; Shariah requirement; prohibitions in legal documentation.
    JEL: K40 G18
    Date: 2009–11

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