nep-ara New Economics Papers
on Arab World
Issue of 2010‒08‒21
two papers chosen by
Quentin Wodon
World Bank

  1. The impact of the global financial turmoil and recession on Mediterranean countries’ economies By Michael Sturm; Nicolas Sauter
  2. Yaraticilik ve Izmir Üzerine By Nese Kumral

  1. By: Michael Sturm (European Central Bank, Directorate General International and European Relations, Kaiserstrasse 29, 60311 Frankfurt am Main); Nicolas Sauter (European Central Bank, Directorate General International and European Relations, Kaiserstrasse 29, 60311 Frankfurt am Main)
    Abstract: This paper reviews the impact of the global financial turmoil and the subsequent recession on the economies of southern and eastern Mediterranean countries. The major effects on the economies of this region have come through transmission channels associated with the real economy, i.e. the global recession. These are, in particular, declines in exports, oil revenues, tourism receipts, remittances and foreign direct investment (FDI) inflows, with the drop in exports so far appearing to have had the strongest impact. As a result, real GDP growth has weakened in the wake of the global crisis. However, the weakening of economic activity in the Mediterranean region has been less pronounced than in advanced economies and most other emerging market regions. The main reason for this is that the direct impact of the global financial turmoil on banking sectors and financial markets in Mediterranean countries has been relatively limited. This is mainly due to (i) their lack of exposure to US mortgage-related assets that turned “toxic”, a feature the region shares with other emerging markets, and (ii) the limited financial development of many countries in the region and their limited integration into global financial markets, a feature that distinguishes the region from other emerging markets and, in particular, from the euro area’s neighbours to the east. Notwithstanding the relative resilience of southern and eastern Mediterranean countries in the wake of the global crisis, the region faces significant challenges. In particular, many countries need significantly higher growth rates to address the employment challenge posed as a consequence of demographic developments. JEL Classification: R11, E60, G21
    Keywords: Global economic crisis, Mediterranean countries, financial sector, international spillovers
    Date: 2010–08
  2. By: Nese Kumral (Department of Economics, Ege University)
    Abstract: (This paper is in Turkish)According to Richard Florida, who has popularised the concept of creativity in the economics literature, the main three factors that determine regional economic growth are technology, talent, and tolerance (also known as 3T). It is vital for the economic growth of a region that it promotes tolerance via embracing new ideas and cultural diversity, giving emphasis on creativity, and producing value out of differences. In addition, being able to provide a high quality of life to a creative class that can be employed in areas where they can realise their creative potential and talent is crucial. Finally, the presence and density of creative capital is a necessity; which can boost the growth and innovative capacity of the region, create new areas of employment and stimulate production based on high technology. Studies on creativity have increased in countries that seek to receive a bigger share in the global markets and augment their competitiveness and prosperity. These works focus on certain factors that bring about creativity, and they seek to assess creative capacity at the national, regional and municipal levels to suggest policies for their enhancement. Although these studies still require further elaboration, their emphasis on the concept of tolerance and its influence on human creativity enrich the literature on competitiveness and growth. Tolerance or high quality of life do not emerge spontaneously in a region, but can only flourish through the democratic principles of transparency, accountability, participation, representation, constitutionality, and the protection of liberties. Moreover, the capability of a government to scientifically develop and sustain the implementation of long-term policies to create economic value out of regional potentials is of utmost significance. In conclusion, perhaps what is more important than economic success or competitiveness is that the intrinsically human faculty of creativity, which has played a key role in the continuation of human existence, can be helped to flourish to carry on to the following generations through better modes of governance and societies with higher level of tolerance. This is why, as Jean Pierre Changeux puts it: “with the assets of universal scientific knowledge, human beings should make a commitment to use the creative faculties they possess in their brains to give meaning to that which calls out for it the most: humanity itself. It is our responbility to urgently invent an ethical model which breaks the violence, the intolerance, the crimes of our cultural past, and ensures more efficiently survival and well-being for all human lives” (Chanqeux, 2005).
    Keywords: Creativity, Egean region.
    Date: 2010–05

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