nep-ara New Economics Papers
on Arab World
Issue of 2010‒11‒27
eight papers chosen by
Quentin Wodon
World Bank

  1. An analysis of Turkish hydropower policy By Erdogdu, Erkan
  2. An Ideal Islamic Economic System: A Gone Case By Shaikh, Salman
  3. SUKUK BOND: The Global Islamic Financial Instrument By Shaikh, Salman; Saeed, Shan
  4. Turkey’s Improving Integration with the Global Capital Market: Impacts on Risk Premia and Capital Costs By Rauf Gönenç; Saygin Sahinöz; Ozge Tuncel
  5. The impact of ethic formation on individual income By Sarıbaş, Hakan
  6. Arab-Related Bilateral and Multilateral Sources of Development Finance: Issues, Trends, and the Way Forward By Eric Neumayer
  7. Oil Shocks and Kuwait’s Dinar Exchange Rate: the Dutch Disease Effect By Al-mulali, Usama; Che Sab, Normee
  8. Gulf Migration Study: Employment, Wages and Working Conditions of Kerala Emigrants in the United Arab Emirates By K. C. Zachariah; B.A. Prakash; S. Irudaya Rajan

  1. By: Erdogdu, Erkan
    Abstract: Over the last decade, Turkish electricity demand has increased more than 8% per annum as a result of economic development. Being one of the renewable energy sources par excellence, non-exhaustible, non-polluting and economically more attractive than other renewable sources, hydropower has turned out to be an important contributor to the future energy mix of the country. This paper deals with hydropower policies to meet increasing electricity demand for sustainable energy development in Turkey. Turkey has a total gross hydropower potential of 433 TWh/year and 140 TWh/year of this capacity can be used economically, corresponding to the second largest economic potential in Europe. Currently only 35% of economic hydro potential of the country is utilized. After completion of hydropower plants under construction, this figure will increase to 49%. It is obvious that even after the construction of all projects there will still be a huge hydro potential in Turkey. Besides, Turkey is a poor country in terms of fossil fuels (oil, natural gas, coal and so on) and has no nuclear power plant in operation, which strengthens the role of hydro energy among other alternatives.
    Keywords: Hydro energy; Energy policy; Turkey
    JEL: Q28 Q48
    Date: 2011–01
  2. By: Shaikh, Salman
    Abstract: Islamic finance industry mostly uses LIBOR linked financial contracts which are akin to debt financing than the more preferable participatory modes of Mudarabah and Musharakah. As per the current orthodox understanding and practice of Islamic finance, the often cited preferable modes like Mudarabah and Musharakah are incapable even in a simple model economy with them as the only mode of financing. Hence, they are rarely used. The prevalent Islamic products which are linked with LIBOR are and will predominantly be used and practiced Islamic finance may remain incapable of providing egalitarian benefits it once promised. Ironically, Islamic values like justice, equality, truth, trust, kindness, honesty and responsibility are often discussed in literature and seminars on Islamic Economics; whereas, in reality, the lack of these values in practice is the major reason why preferable participatory modes remain unusable! As discussed, the current orthodox understanding of Islamic fiscal redistribution mechanisms like Zakat and Inheritance also make them incapable of contributing towards the establishment of an egalitarian economic framework. This paper proposes an alternate approach to practiced Islamic finance and orthodox understanding of Zakat and inheritance laws and shows that the alternate approach could still be sufficient to contribute towards egalitarian objectives effectively.
    Keywords: Islamic Finance; Islamic Economics; Welfare Economics; Experimental Economics; Heterodox Economics; Zakat; Fiscal Redistribution
    JEL: A1 H2 G0 B5
    Date: 2010–11–01
  3. By: Shaikh, Salman; Saeed, Shan
    Abstract: Global financial markets are volatile right now and will remain so for the next 2-years. Equity markets are shaky. Investors risk appetite is suddenly moving to commodities. Bond market is precarious as Sovereign debt risk goes high. Global economy is slowly moving into recession which will be either U or W-Shaped. Recovery figures are questionable and are creating doubts among investors. So, where are we heading towards? As we navigate through treacherous times, Islamic financial market provides a new hope without speculation and exploitation of resources. The emergence of Sukuk Islamic Bond in the financial markets heralds a new era which can provide much needed financial stability and mitigation of risk in these arduous times. With advent of Sukuk in the financial world, the market players have got a new option to invest into this asset which hold considerable value and benefit for all. This bond promises to all investors an equitable return which is justifiable and above all safe for the strategic investment purpose.
    Keywords: islamic Securitization; Islamic bonds; Structured Finance; Sukuk; Financial Engineering; Financial Innovation
    JEL: G10 G21
    Date: 2010–11–01
  4. By: Rauf Gönenç; Saygin Sahinöz; Ozge Tuncel
    Abstract: Turkey has considerably improved its terms of access to the global capital market. Progress in macroeconomic fundamentals has enhanced credibility and reduced risk premia and capital costs. This has had broad effects on capital supply conditions in the entire economy. Real interest rates have declined, and funds of lengthened maturity are becoming available for a broader range of borrowers and fund users, offering a basis for broader–based long–term growth. Estimations in the paper suggest that reinforcing fiscal institutions, price stability, governance quality, political stability and trade and growth performance would help Turkey to continue to improve its integration with the international capital market and reduce durably its capital costs. This paper relates to the 2010 OECD Economic Review of Turkey (<P>L’Intégration croissante de la Turquie avec le marché global des capitaux : Effets sur les primes de risque et coût du capital<BR>La Turquie a considérablement amélioré ses conditions d'accès au marché global des capitaux. Des progrès dans les fondamentaux macroéconomiques ont renforcé la crédibilité et réduit les primes de risque et le coût du capital. Cela a eu des conséquences considérables sur les conditions de financement de l'économie tout entière. Les taux d'intérêt réels ont diminué, et des fonds à plus longue maturité deviennent disponibles pour un plus large éventail d'utilisateurs de fonds, offrant une base plus large pour la croissance à long terme. Les estimations dans le document suggèrent que le renforcement des institutions budgétaires, de la stabilité des prix, de la qualité de la gouvernance, de la stabilité politique et de la performance du commerce extérieur et de la croissance aiderait la Turquie à continuer à améliorer son intégration avec le marché global des capitaux et à réduire durablement ses coûts en capital. Ce document se rapporte à l’Étude économique de Turquie de l’OCDE, 2010, (
    Keywords: capital markets, risk premia, credit rating, interest rate, economic growth, capital costs, open economy, fiscal institution, croissance économique, marchés de capitaux, taux d'intérêt, prime de risque, coût du capital, économie ouverte, institution budgétaire, notation de crédit
    JEL: E43 E44 E62 F34 F43 G15
    Date: 2010–11–10
  5. By: Sarıbaş, Hakan
    Abstract: In this paper, the relationships between individual income and ethics formation are studied. Our theoretical model explains what happens to individual incomes when a culture encourages people to devote life-time efforts to establish a virtuous character. Two propositions emerged from the present study. Firstly, if there exists a channel from effforts to income via ethics, individual income begins to increase and reaches a peak as more and more time is devoted to ethics formation. Additional time after the peak becomes detrimental to the individual income. Secondly, time for ethics formation becomes economically useless when the channel from efforts to income via ethics dissolves. Our simulations and econometric findings support the theoretical explanations.
    Keywords: Growth; Institutions; Ethics; Turkey
    JEL: O17 C02 O12
    Date: 2010–11–02
  6. By: Eric Neumayer
    Abstract: This article analyses the organizational structure as well as the characteristics of development finance provided by Arab donor countries. This is done with a comparative view in relation to western donors and with the aim to develop recommendations as to how Arab development finance can be strengthened and rendered more effective for the new Millennium. In the 1960s and 1970s Arab donors established a variety of national and multilateral agencies. [Discussion Paper No. 2002/96]
    Keywords: aid, official development assistance, Arab agencies, Development Assistance Committee
    Date: 2010
  7. By: Al-mulali, Usama; Che Sab, Normee
    Abstract: This study investigates the impact of oil prices on the exchange rate in Kuwait which uses the fixed exchange rate regime to the US dollar. Time series data from 1970-2008 covering all the oil shocks are used. In order to achieve the results of this study, the VAR model, the Johansen-Juselius Multivariate Cointegration test and the Granger causality test are implemented. Due to the results we have arrived at, we recommend that Kuwait either maintains its exchange rate regime (pegged to a basket of currencies), or uses a crawling peg regime.
    Keywords: oil shocks; real exchange rate; Kuwait; VAR
    JEL: E30 F31 Q43
    Date: 2010–10–12
  8. By: K. C. Zachariah; B.A. Prakash; S. Irudaya Rajan
    Abstract: This is the fourth in a series of Working Papers published by the CDS on Kerala migration. Unlike the other three, this one is financed by the Kerala Government and the data were collected in UAE. The objectives of this Working Paper are to; document changes in the labour demand for different categories of emigrant workers, enumerate the emigration policies, examine employment and working conditions, wage levels and related problems of the Kerala emigrants, understand the education and training requirements of future emigrants to UAE. [Working Paper No. 326]
    Keywords: Kerala Government, UAE, workers, policies, education, training
    Date: 2010

This nep-ara issue is ©2010 by Quentin Wodon. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.