nep-ara New Economics Papers
on Arab World
Issue of 2010‒05‒02
ten papers chosen by
Quentin Wodon
World Bank

  1. Global Crisis, National Responses: The Political Economy of Turkish Exceptionalism By Ziya Onis; Ali Burak Güven
  2. International Migration and Human Development in Turkey By Ahmet Içduygu
  3. Islamic equity funds: an Italian perspective By Stefano, Collina
  4. Econometric Analysis of the Bilateral Trade Flows in the Gulf Cooperation Council Countries By INSEL, Aysu; TEKCE, Mahmut
  5. Problems and Prospects of Islamic Banking: a case Study of Takaful By Ahmad, Mohd Izhar; Masood, Tariq; Khan, Mohd Saeed
  6. The GCC Banking Sector: Topography and Analysis By Abdullah Al-Hassan; Nada Oulidi; May Y. Khamis
  7. Regional Financial Integration in the GCC By Raphael A. Espinoza; Ananthakrishnan Prasad; Oral Williams
  8. Global Financial crisis and Islamic finance By Alasrag, Hussien
  9. Food and Global Crises impacts on Middle East and North African Region: What lesson can we learn for the future? By Drine, Imed
  10. The Defense-growth nexus: An application for the Israeli-Arab conflict By Abu-Qarn, Aamer

  1. By: Ziya Onis (Koc University); Ali Burak Güven
    Abstract: With its dilatory and piecemeal fiscal activism and uncharacteristic reluctance toward IMF assistance, the Turkish government’s response to the global economic crisis of 2008-2009 sharply contrasted the bold approaches adopted by other major emerging market countries. Underlying this policy exceptionalism were the constraints posed by Turkey’s pre-existing policy and macroeconomic constraints, cognitive failures on the part of policymakers, and the conjunctural dynamics of domestic politics. The interplay of these factors progressively narrowed the policy space for vigorous action, leading instead to a motley combination of reactive initiatives that neither offered sufficient protection to the most vulnerable social groups during the crisis nor promised sustainable growth in the long run.
    Keywords: global economic crisis, fiscal stimulus, IMF, emerging markets, Turkey
    JEL: F33 F39
    Date: 2010–04
  2. By: Ahmet Içduygu (Department of International Relations and Director of the Migration Research Program at Koç University (MiReKoc))
    Abstract: As often argued, a negative perception of immigration, or even emigration, prevails public opinions and governments in most countries. It is argued that caused by economic hardship or political hardship or political unrest in countries of origin, it would threaten well-being and identity in countries of destination, and sometimes endanger political security. However, on the other hand, social scientists recognize that, being a part of the global circulation and global integration, human mobility bears a tremendous potential for human progress. This view is increasingly shared by several actors for which adequate policies could make migration a genuine instrument for economic and social development. Therefore, the conditions under which, and the mechanisms through which, migration can transform individual benefits into an aggregated one, for the greater society, are to be studied. From this perspective, Turkey provides us with an interesting case study; firstly because of its multiple migration roles as a country of emigration, immigration and transit, over time; secondly because, this ongoing flows of emigration and immigration involve various stages of a migration cycle; thirdly because, this migration cycle reflects, both explicitly and implicitly, some gains, and occasionally loses, both for the country and its people, migrants and non-migrants; and finally because of Turkey’s longestablished EU-membership process which highlights various types of migration issues. This report provides us with an overview of some aspects of migration-development nexus in the case of Turkey.
    Keywords: Development, emigration, immigration, remittances, migration cycle, Turkey, European Union
    JEL: O1 O15 F2 F22 F24
    Date: 2009–10
  3. By: Stefano, Collina
    Abstract: Fuelled by the skyrocketing commodities prices and the booming middle-classes in emerging economies, the Islamic equity funds industry has been in the recent years one of the fastest growing sector in the global finance panorama. This paper discusses the peculiar characteristics of an Italian equity portfolio constructed following the Sharia'a provisions and the opportunities this industry offers to Italian financial institutions in both the retail and wholesale markets. This paper also discusses how these funds weathered the financial crisis and how they are able to offer a value-added to particular investor classes along with the ethical part.
    Keywords: Islamic Finance; Islamic Equity Funds; Performance; Islamic Mutual Funds; Financial Ratios
    JEL: G11
    Date: 2009–09–14
  4. By: INSEL, Aysu; TEKCE, Mahmut
    Abstract: This study analyzes the trade flows of the Gulf Cooperation Council (GCC) both among its member countries and with the rest of the world for the 1997-2002 and 2003-2007 periods. In this paper, the research question is whether the trade flows of the GCC countries with their partners have sustained and/or they have developed new relations over time, mainly after the 2003 Customs Union agreement of the GCC. For this purpose, fixed effects models have been estimated in order to obtain individual country effects variable. Then, trade model as a function of distance and income variables and the country effects model as a function of the time invariant control variables have been estimated simultaneously within the panel analysis using the Least Squares and Generalised Method of Moments under the assumption of the presence of cross section heteroskedasticity and the robust standard errors. It has been found that: (1) The order of top fifteen trade partners has changed significantly from the EU countries and the US to the Asian countries after 2003. (2) Exports and imports of the GCC countries are related to the wealth of the partner countries, but not to their distance, mainly due to the nature of their exported and imported goods, the characteristic of the region and developments in transportation facilities.
    Keywords: Gulf Cooperation Council Countries; Trade Flows; Gravity model; Panel Analysis; System Estimation
    JEL: O53 F14 C33 C01
    Date: 2010–04–15
  5. By: Ahmad, Mohd Izhar; Masood, Tariq; Khan, Mohd Saeed
    Abstract: The paper is an attempt to analyse the working of Takaul in the world and its popularity in the insurance sector in the world. Keeping in view of Sharia we have also tried all possible aspects of insurance system popular in the world and tried to look at its possibility to familiarize more amongst Muslims of the world. It is observed that customer awareness remain low, however this is often attributed to a limited understanding of Islamic finance in the banking and insurance world. We wish to have a proper salesmanship and advertisement of Islamic banking system in India and all around the world.
    Keywords: Islamic Banking; Takaful
    JEL: A10
    Date: 2010–01–10
  6. By: Abdullah Al-Hassan; Nada Oulidi; May Y. Khamis
    Abstract: In this paper, we analyze the evolution of the Gulf Cooperation Council (GCC) banking sectors in the six member countries including ownership, concentration, cross-border linkages, balance sheet exposures and risks, recent trends in credit growth, and financial soundness. We identify risks to the banking sector's financial stability in the context of the current global crisis and their mitigating factors.
    Keywords: Asset management , Bank soundness , Banking sector , Capital , Cooperation Council for the Arab States of the Gulf , Credit expansion , Credit risk , Cross country analysis , Household credit , Liquidity , Loans , Profit margins ,
    Date: 2010–04–02
  7. By: Raphael A. Espinoza; Ananthakrishnan Prasad; Oral Williams
    Abstract: We investigate the extent of regional financial integration in the member countries of the Gulf Cooperation Council. The limited volume data available suggests that regional integration is non-negligible. Bahrain and Kuwait investments especially are oriented towards the region. The development of stock markets in the region will also improve the extent of financial integration. Interest rate data shows that convergence exists and that interest rate differentials are relatively short-lived-especially compared to the ECCU, another emerging market region sharing a common currency. Equities data using cross-listed stocks confirms that stock markets are fairly integrated compared to other emerging market regions, although financial integration is hampered by market illiquidity.
    Keywords: Asset prices , Banking sector , Capital flows , Cooperation Council for the Arab States of the Gulf , Cross country analysis , Currency pegs , Economic integration , Interest rates , Monetary policy , Monetary unions , Regional shocks , Stock markets ,
    Date: 2010–04–05
  8. By: Alasrag, Hussien
    Abstract: The world economy is still suffering the crisis, considered the most severe since the Great Depression, where economic downturn at historic magnitude and many countries across the globe, irrespective of their development level, are still under strain dealing with this crisis. The severe global crisis that has spilled from the financial sector to the real economy, including international trade in manufactures, commodities and services. The onset of the present crisis can be traced back to July 2007 with the liquidity crisis due to the loss of confidence in the mortgage credit markets in the United States. At first, there was uncertainty about the possible spillovers to the rest of the economy, and there was also discussion about the risks of contagion and decoupling, that is to say, the capacity of other countries – especially developing countries – to isolate themselves from the problems originating in the United States (which is the largest market for many countries). The hope was that the crisis would be restricted to financial markets, with few repercussions on the real economy and the rest of the world. This hope was shattered in September 2008 as the crisis entered an acute phase, with strong downward fluctuations in the stock markets, substantially reduced rates of economic growth, volatile exchange rates, and squeezes in demand and consumption, leading to falls in industrial production and decreasing flows of international trade and FDI, and causing impacts on related areas such as transfer of technology. The crisis has also been accompanied by increases in unemployment, with concomitant declining incomes and demand. The severity of the current crisis has led to the evaluation of the foundations of the capitalist financial system and the search for ideas and solutions. While some have proposed that the Islamic finance serves as a vehicle for recovering from the international financial crisis and The Islamic banking industry may be able to strengthen its position in the international market as investors and companies seek alternate sources of financing. Other economists have argued that Islamic finance, is a different way of structuring financial dealings; but, it is not a totally different financial system. This paper tries to note the main causes and the impacts of the current financial and economic crisis. In addition to discuss the belief that the Islamic finance and its prospective is a viable alternative to the ailing global financial system.
    Keywords: financial and economic crisis ; Islamic finance
    JEL: F37 D53 G2 Z12 N2 E4 F33 G21
    Date: 2010–04
  9. By: Drine, Imed
    Abstract: The recent crises concerning food and finances highlight the extreme fragility of the MENA countries and question the sustainability of the development processes. The economic and social impacts of these crises on the economies of the MENA region signal the magnitude of the challenges facing the region and the need to reorient its development policies. This paper intends to provide a comprehensive analysis of economic and social impacts of the two crises to help understanding, on one hand, the magnitude of the problem facing the region, and the need for a reorientation of the region’s development policies, on the other.
    Keywords: Food Crisis; Financial Crisis; MENA Region
    JEL: D53 Q11 F41 E44
    Date: 2010–03
  10. By: Abu-Qarn, Aamer
    Abstract: This paper revisits the defence-growth nexus for the rivals of the Israeli-Arab conflict over the last four decades. To this end, we utilize the Toda and Yamamoto (1995) causality test and the generalized variance decomposition. Contrary to the conventional wisdom and many earlier studies, we fail to detect any persistent adverse impact of military expenditures on economic growth. Our conclusions are kept intact even when we account for the possibility of endogenous structural breaks and during the post-1979 peace treaty period. Our findings imply insignificant peace dividends once the conflict is resolved and the military spending is cut to internationally acceptable standards.
    Keywords: Growth; Middle East; Israeli-Arab conflict; Causality; Generalized Forecast Error Variance Decomposition
    JEL: O53 H56
    Date: 2010

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