nep-ara New Economics Papers
on Arab World
Issue of 2010‒12‒18
twelve papers chosen by
Quentin Wodon
World Bank

  1. The making of a state-centered "public sphere" in Turkey : a discourse analysis By Hazama, Yasushi
  2. The Rise and Fall of Gulf Finance House By khnifer, mohammed
  3. The Effect of Compulsory Schooling Laws on Teenage Marriage and Births in Turkey By Murat G. Kýrdar; Meltem Dayýoglu Tayfur; Ýsmet Koç
  4. Economic integration and the two margins of trade: the impact of the Barcelona Process on North African countries’ exports By Bensassi, Sami; Márquez-Ramos, Laura; Martínez-Zarzoso, Inmaculada
  5. Specific features of Islamic accounting and cultural paradigm By Dima (Cristea), Stefana Maria; David, Delia; Păiuşan, Luminiţa
  6. The Deindustrialization of Istanbul By Dogruel, Fatma; Dogruel, A. Suut
  7. Regulatory Reforms to Unlock Long–Term Growth in Turkey By Rauf Gönenç; Lukasz Rawdanowicz
  8. Country Heterogeneity and Long-Run Determinants of Inflation in the Gulf Arab States By Basher, Syed Abul; Elsamadisy, Elsayed Mousa
  9. On the Sustainability of a Monetary Union under External Shocks: a Theoretical Result and Its Application to the Gulf Countries By Etienne Farvaque; Norimichi Matsueda
  10. The 2008-09 Crisis in Turkey: Performance, Policy Responses and Challenges for Sustaining the Recovery By Lukasz Rawdanowicz
  11. After the Crisis: Mitigating Risks of Macroeconomic Instability in Turkey By Lukasz Rawdanowicz
  12. Improving Portfolio Optimization by DCC And DECO GARCH: Evidence from Istanbul Stock Exchange By YILMAZ, TOLGAHAN

  1. By: Hazama, Yasushi
    Abstract: Why is it that state-centered recognition of the public sphere has prevailed in Turkey during the last decade? The frame analysis of the “public sphere†discourse during the 2002-2009 period revealed that the contingency of the discourse on the Islamic headscarf issue discouraged an essential understanding of the authentic public sphere. Secularists framed the public sphere as a politically neutral arena that must be protected by the state. By contrast, pro-Islamists initially counter-framed the public sphere positively, in line with the Habermasian definition. Yet, in the face of stiff opposition from the secularists, the pro-Islamists came to adopt a negative counter-frame implying that the public sphere impinged on the freedom of wearing a headscarf. As a result, both the secularists’ and pro-Islamists’ frames entrenched the general recognition of the state-centered public sphere in Turkish society.
    Keywords: Turkey, Social problems, Social conditions, Public administration, Urban societies, Community, Public sphere, Discourse analysis
    Date: 2010
  2. By: khnifer, mohammed
    Abstract: This paper dissects the balance sheet and business model of Gulf Finance, and scrutinizes the existence of a "pre-exit premium" in their activities – on top of the usual exit fees and/or performance fees. The study suggests that this practice (uncommon even for conventional Private Equity businesses – much less for an Islamic Private Equity house) was pioneered by GFH and it is this same practice that brought them down to their knees.
    Keywords: Islamic Banks; Private Equity; Premium; Islamic Finance; Shariah; sharia; sukuk; risk;default
    JEL: G24
    Date: 2010
  3. By: Murat G. Kýrdar (Middle East Technical University); Meltem Dayýoglu Tayfur (Middle East Technical University); Ýsmet Koç (Institute of Population Studies, Hacettepe University)
    Abstract: This paper estimates the impact of the extension of compulsory schooling in Turkey from 5 to 8 years on the marriage and fertility behavior of teenage women in Turkey using the 2008 Turkish Demographic and Health Survey. We find that the new education policy reduces the probability of marriage and giving birth for teenage women substantially: the probability of marriage by age 16 is reduced by 44 percent and the probability of giving birth by age 17 falls by 36 percent. The effects of the education policy on the time until marriage and firstbirth persist beyond the completion of compulsory schooling. In addition, we find that the delay in the time until first-birth is driven by the delay in the time until marriage. After a woman is married, the rise in compulsory schooling years does not have an effect on the duration until her first-birth. Finally, we find that the education policy was more effective in reducing early marriage than a change in the Civil Code aimed for this purpose.
    Keywords: Age at marriage, Fertility, Education, Compulsory Schooling
    JEL: J12 J13 I20 D10
    Date: 2010–12
  4. By: Bensassi, Sami; Márquez-Ramos, Laura; Martínez-Zarzoso, Inmaculada
    Abstract: According to recently developed models of trade with imperfect competition and heterogeneous firms, lower trade costs increase bilateral trade not only through a rise in the mean value of individual shipments (the intensive margin of trade), but also through an increase in the number of exporting firms (the extensive margin of trade). The main aim of this paper is to provide new empirical evidence of the effects of the Euro-Mediterranean (EuroMed) agreements on both margins of trade. Using highly disaggregated export data for four North African countries (Algeria, Egypt, Morocco and Tunisia) and two Middle East countries (Jordan, Lebanon) over the period from 1995 to 2008, we estimate the impact of the EuroMed agreements on both trade margins and we provide empirical evidence of the validity of the theoretical predictions. Results indicate that only the North African countries enjoyed a positive and significant effect of the Barcelona process on their exports to the four biggest countries in the European Union.
    Keywords: Euro-Mediterranean agreements; trade integration; intensive and extensive margins.
    JEL: F10
    Date: 2010
  5. By: Dima (Cristea), Stefana Maria; David, Delia; Păiuşan, Luminiţa
    Abstract: The objective of this paper is to provide a synopsis of Islamic accounting characteristics as well as to identify some of the determinants which led to its specificity. It explores several aspects related to the Islamic accounting principles and its institutional framework. The cultural paradigm is viewed as a differentiating key factor in the elaboration and implementation of the accounting standards in the Islamic Word. Based on Hofstede approach, the elements of this paradigm are linked to the relative preference for IFRS adoption of different Islamic countries. From the proposed analysis, it emerges the image of Islamic Accounting’s complex nature, which may be seen as a distinct alternative to the principles and views promoted by IFRS.
    Keywords: Islam; accounting; IFRSs; culture; banking; AAOIFI
    JEL: M41
    Date: 2010–06–16
  6. By: Dogruel, Fatma; Dogruel, A. Suut
    Abstract: Istanbul and Adana are among the oldest and important industrial zones of Turkey. However, the shares of these two regions in the Turkish manufacturing sector substantially decreased after the year 1980. Initially, Adana was a center for the textile industry and the textile was the engine of the Turkish manufacturing sector. During 1980’s and 1990’s, textile industry gradually lost its dominance. Therefore, the change in the share of Adana can be explained by this phenomenon. On the other hand, manufacturing activities in Istanbul are highly diversified. The basic factor behind the decrease in the share of manufacturing sector of Istanbul is the deindustrialization policy implemented in this city during the last several decades. As a result of this policy some of the plants moved to neighborhoods of Istanbul. At the same time, constructions of new large scale plants were not allowed. In spite of the implementation of the deindustrialization policy, Istanbul still have largest share in the Turkish manufacturing sector. Considering the geographical proximity, in addition to direct effects on Istanbul, it is possible to expect that these policies may indirectly affect neighborhood regions. Employing the spatial statistical techniques, we analyze the growth of the manufacturing in Istanbul and its neighborhoods. The paper also focuses on the effects of the deindustrialization policy on the productivity and the firm size in Istanbul.
    Keywords: deindustrialization policy; productivity changes; firm size; shift-share analysis
    JEL: O18 R12 R38
    Date: 2010–09
  7. By: Rauf Gönenç; Lukasz Rawdanowicz
    Abstract: In the 2000s, Turkey has enjoyed rapid catching–up. This was possible despite the adverse business environment, as the semi–formal and informal economy had a significant contribution to the expansion of the private sector. Productivity growth was strong, but labour utilisation remained very low. Looking forward, higher employment and productivity growth will not be possible without profound regulatory reforms of minimum wages, severance payments, social security contributions and flexible job contracts. These reforms have been discussed for a long time, but political obstacles prevented implementing them. Resolving this deadlock calls for advancing an integrated strategy of labour reforms and formalisation via experimenting with new regulation on the voluntary basis to identify the most successful solutions that can be later rolled out to the whole economy. Moreover, Turkey has to ease further anti–competitive product market regulations by reducing barriers to entrepreneurship and foreign direct investment, and by limiting government involvement in business. A successful implementation of these reforms would allow Turkey to enjoy golden decades. This paper relates to the 2010 OECD Economic Review of Turkey (<P>Réformer les réglementations pour débloquer la croissance à long-terme de la Turquie<BR>Dans les années 2000 la Turquie a réalisé un rattrapage rapide. Cela a été possible malgré un cadre réglementaire défavorable, grâce à des activités semi-formelles et informelles qui ont considérablement contribué à l'expansion du secteur privé. La croissance de la productivité a été forte, mais l'utilisation du travail reste très faible. A l'avenir l'emploi et la productivité ne pourront pas croitre plus vite sans de profondes réformes du salaire minimum, des indemnités de licenciement, des cotisations de sécurité sociale et des contrats de travail flexibles. Ces réformes ont été discutées depuis longtemps mais des obstacles politiques ont empêché leur mise en oeuvre. Pour dépasser ce blocage, une stratégie intégrée de réformes du marché du travail et de formalisation est nécessaire, via l'expérimentation de nouvelles règlementations sur la base du volontariat, afin d'identifier de meilleures solutions qui peuvent être progressivement étendues à l'ensemble de l'économie. En outre, la Turquie devrait réduire les réglementations anti-concurrentielles dans les marchés de produits en diminuant les obstacles à l'entreprenariat et à l'investissement étranger direct, et en restreignant l?intervention du gouvernement dans les affaires. La mise en oeuvre réussie de ces réformes permettrait à la Turquie de bénéficier de brillantes décennies de croissance. Ce document se rapporte à l’Étude économique de Turquie de l’OCDE, 2010 (
    Keywords: growth, regulation, product markets, Turkey, political economy, reforms, labour market, croissance, réglementation, marché du travail, marchés de produits, Turquie, économie politique, réformes
    JEL: D7 J2 J3 J4 L5 O4 P5
    Date: 2010–12–06
  8. By: Basher, Syed Abul; Elsamadisy, Elsayed Mousa
    Abstract: Applying nonstationary panel data econometric methods, this paper analyzes the major sources and transmission of inflation in the Gulf Cooperation Council (GCC) countries over the 1980-2008 period. We argue that, in GCC countries, money is essentially demand determined, so that the high collinearity between money and aggregate demand indicators such as non-hydrocarbon output is expected and should be dealt with accordingly. Several important results emerge from the analysis. First, the money supply stands out as a significant determinant of inflation both in short- and long-run. Both foreign prices and the nominal effective exchange rate are shown to be more successful in explaining inflation in the long-run than the short-run. The half-life of the speed of adjustment reveals that it takes about 2.9 years for 50% of a shock to the long-run equilibrium to dissipate. An implication of our results is the case it makes for more sovereign monetary policies in GCC countries.
    Keywords: Inflation; Monetary policy; Fiscal policy; Exchange rates; Oil price; Panel data.
    JEL: C32 E31 H30 E50 C33
    Date: 2010–12–09
  9. By: Etienne Farvaque (Faculty of Economic and Social Sciences, University of Lille I); Norimichi Matsueda (School of Economics, Kwansei Gakuin University)
    Abstract: External shocks, be they political or economic, can pose a significant threat to the sustainability of a monetary union. This paper focuses on the openness of a monetary union, and examines how the degrees and characteristics of the sensitivities of its member nations towards external shocks affect the sustainability of the commitment which each of its members made when joining the union. Furthermore, we discuss the sustainability of the prospective monetary union among the Gulf Cooperation Council countries in the light of obtained insights.
    Keywords: Monetary Union, Optimum Currency Areas, External Shocks, Gulf Cooperation Council
    JEL: E58 E61 F33
    Date: 2010–12
  10. By: Lukasz Rawdanowicz
    Abstract: Turkey is recovering from its most severe recession in several decades. The massive contraction in GDP is largely explained by the unprecedented collapse in foreign demand, which was aggravated in Turkey by negative confidence effects and structural problems with competitiveness prior to the crisis. In contrast to previous recessions, Turkey could afford counter–cyclical polices and the financial markets proved resilient. During the crisis, the authorities cut interest rates significantly and promptly and implemented fiscal stimulus. This truly novel experience was possible thanks to a better macroeconomic position, a sounder monetary and fiscal policy framework, and better financial market regulations. The immediate policy challenge is to gradually remove policy stimulus and address medium–term stability considerations in a way that does not jeopardise the recovery. This paper relates to the 2010 OECD Economic Review of Turkey (<P>La crise 2008-09 dans la Turquie : La performance, les réponses politiques et défis pour le maintien de récupération<BR>La Turquie se remet de sa récession la plus grave depuis plusieurs décennies. La contraction massive du PIB s'explique en grande partie par l'effondrement sans précédent de la demande étrangère, qui a été aggravée par des effets de confiance négatives et des problèmes structurels de compétitivité avant la crise. Contrairement aux récessions précédentes, la Turquie a pu se permettre des politiques contra-cycliques et des marchés financiers ont bien résisté. Pendant la crise, les autorités ont pu rapidement et sensiblement réduit les taux d'intérêt et mis en oeuvre des mesures de relance budgétaire. Cette expérience a été vraiment nouvelle et elle a été possible grâce à une meilleure position macroéconomique, un cadre monétaire et budgétaire plus sain, et une meilleure réglementation des marchés financiers. Le défi immédiat de politique économique est de supprimer progressivement la politique de relance et de prendre en compte les considérations de stabilité à moyen terme de manière à ne pas compromettre la reprise. Ce document se rapporte à l’Étude économique de Turquie de l’OCDE, 2010, (
    Keywords: public finances, fiscal consolidation, Turkey, recession, counter-cyclical, outlook, finances publiques, perspectives, Turquie, assainissement budgétaire, récession, politique contre cyclique
    JEL: C11 C32 E5 E6
    Date: 2010–12–06
  11. By: Lukasz Rawdanowicz
    Abstract: Turkey is recovering from a severe recession. Once growth gains full speed, the authorities will likely face the challenge of widening external imbalances and of ensuring a smooth functioning of the financial markets. The former will require improving competitiveness, raising domestic saving, attracting more FDI inflows and reducing energy import dependency. Improvements in many of these areas will depend on structural reforms in the labour and product markets. Financial market stability calls for adopting international standards of prudential regulations and reacting pre-emptively to new developments in the financial markets. Mitigating risks of macroeconomic instability will be crucial for embarking on a stable and strong growth path to generate sustainable convergence with the OECD average income level. This paper relates to the 2010 OECD Economic Review of Turkey (<P>Après la crise : Réduire les risques d'instabilité macroéconomique en Turquie<BR>La Turquie se remet de sa récession la plus grave depuis plusieurs décennies. Quand la croissance prendra son plein essor, les autorités devront faire face au défi de l'élargissement des déséquilibres extérieurs et d'assurer un bon fonctionnement des marchés financiers. Concernant le premier défi, il faudra améliorer la compétitivité, augmenter l'épargne nationale, attirer davantage d'investissement direct étranger et réduire la dépendance vis-à-vis des importations d'énergie. Des améliorations dans plusieurs de ces domaines dépendront de réformes structurelles dans les marchés du travail et des produits. La stabilité des marchés financiers requiert l'adoption des normes internationales de réglementation prudentielle et des initiatives à titre préventif pour faire face aux nouveaux développements dans les marchés financiers. Atténuer les risques d'instabilité macroéconomique sera crucial pour embarquer sur un sentier stable et solide de croissance pour rattraper le niveau de revenu moyen des pays de l’OCDE. Ce document se rapporte à l’Étude économique de Turquie de l’OCDE, 2010, (
    Keywords: competitiveness, Turkey, FDI, saving, financial supervision, current account deficit, trade model, energy import dependence, investissement direct étranger, compétitivité, Turquie, épargne, déficit du compte courant, modèle de commerce, dépendance énergétique, surveillance financière
    JEL: C5 E21 F32 F41 G18 H3 Q43
    Date: 2010–12–06
    Abstract: In this paper, the performance of global minimum variance (GMV) portfolios constructed by DCC and DECO-GARCH are compared to that of GMV portfolios constructed by sample covariance and constant correlation methods in terms of reduced volatility. Also, the performance of GMV portfolios are tested against that of equally weighted and cap weighted portfolios. Portfolios are constructed from the stocks listed in Istanbul Stock Exchange 30 index (hereafter, ISE-30). The results show that GMV portfolios constructed by DCC-GARCH outperformed the other portfolios. In addition, the performance of GMV portfolios estimated by DCC and DECO-GARCH methods are improved by extending calibration period from three years to four years and lowering rolling window term from one week to one day, while the performances of other GMV portfolios decrease. It shows the effect of time varying variance and dynamic correlations on portfolio optimization at Turkish stock market.
    Keywords: DCC-GARCH; DECO-GARCH; GMV portfolio
    JEL: C32 C51 G11 C61
    Date: 2010–12–01

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