nep-ara New Economics Papers
on Arab World
Issue of 2012‒02‒20
thirteen papers chosen by
Quentin Wodon
World Bank

  1. Profitability of Interest-free vs. Interest-based Banks in Turkey By Soylu, Ali; Durmaz, Nazif
  2. Dynamics of Foreign Currency Lending in Turkey By Kutan, Ali; Ozsoz, Emre; Rengifo, Erick
  3. Turkey's response to the global economic crisis By Turhan, Ibrahim M.; Kilinc, Zubeyir
  4. Determinants of foreign direct investment in Turkey: a panel study approach By Esiyok, Bulent
  5. Cari İşlem Açıklarının Sürdürülebilirliği: 2001-2011 Türkiye Örneği By Sahbaz, A
  6. Inflation Dynamics: The Case of Egypt By Ali, Heba
  7. Regional integration and natural resources : who benefits ? evidence from MENA By Carrere, Celine; Gourdon, Julien; Olarreaga, Marcelo
  8. Through which channels can remittances spur economic growth in MENA countries? By Mim, Sami Ben; Ali, Mohamed Sami Ben
  9. The entry price threshold in EU agriculture: deterrent or barrier? By Santeramo, Fabio Gaetano; Cioffi, Antonio
  10. The Arab Spring and the Crisis of the European Border Regime: Manufacturing Emergency in the Lampedusa Crisis By Giuseppe Campesi
  11. Estimated hedonic wage function and value of life in an African country By Abdelaziz Benkhalifa; Mohamed Ayadi; Paul Lanoie
  12. Background Report on Private Sector Development in Latin America, the Post-Communist Countries of Europe and Asia, the Middle East and North Africa By Piotr Kozarzewski; Richard Woodward; Mehdi Safavi
  13. Integration of hydrological and economic approaches to water and land management in Mediterranean climates: an initial case study in agriculture By Bielsa, Jorge; Cazcarro, Ignacio; Sancho, Yolanda

  1. By: Soylu, Ali; Durmaz, Nazif
    Abstract: Islamic banking is consistent with Islamic law and guided by Islamic economics. They are prohibited from charging or paying interest, and can operate only on the basis of the profit-sharing arrangements. Islamic banking has been gaining momentum on a global scale for the last 30 years. It is estimated that the assets of Islamic banks in Turkey will exceed US$25 billion in the next decade and will make up 10% of the total banking system. Therefore, this study compares Islamic banks with interest-based banks to measure their profitability. It also investigates how Islamic financing techniques are used by Islamic Banks.
    Keywords: Turkish banks; interest-based banking; interest-free banking; Islamic banking
    JEL: E43 G21
    Date: 2012–01–01
  2. By: Kutan, Ali; Ozsoz, Emre; Rengifo, Erick
    Abstract: On June 16 2009, in what authorities called ``a surprise development'' the Turkish Government removed a provision from its existing laws that had allowed Turkish residents to borrow in foreign currency from banks operating in Turkey. The development ended a long era of foreign currency lending in Turkey at least in the sense of consumer loans. This paper studies the determinants and consequences of foreign currency lending for banks in Turkey in the run-up to this significant policy change. Our analysis uses detailed foreign and Turkish currency composition bank data for 21 commercial banks in Turkey between 2002 and 2010. We evaluate drivers of saving and lending in foreign currency(FX) in Turkey along with consequences for the banking system in particular and for the economy in general. We highlight possible risks to the Turkish banking system as a result of system's heavy exposure to both channels. In doing so, we show that the policy change was not necessarily a surprise but a cautionary step in the right direction to help keep Turkish banking system stable.
    Keywords: Dollarization; bank performance; bank profitability; Turkish economy
    JEL: O24 G28 F31 G21
    Date: 2012–01–26
  3. By: Turhan, Ibrahim M.; Kilinc, Zubeyir
    Abstract: Turkey was not affected by the financial crisis as much as the advanced economies and managed to rapidly exit the turmoil. The reasons behind the strong response and quick recovery of the Turkish economy were its low country risk and low currency risk premiums. This study shows the foundations of these low risk premiums and compares some measures of these risks of the Turkish economy with peer countries. Second, this paper demonstrates that all of Turkey’s economic sectors were very strong before the crisis and sustained this strength during the course of the crisis. Finally, it discusses the policies that have already been taken and planned to be taken by Turkey’s economic authorities. The government seems to be very determined in keeping fiscal discipline as tight as necessary while not being excessive
    Keywords: financial crises; global economic crisis; Turkey; economic policies; financial markets
    JEL: E66 E58 G28 G01
    Date: 2011
  4. By: Esiyok, Bulent
    Abstract: This study examines the determinants of foreign direct investment (FDI) using a panel of bilateral outward FDI stocks of 19 OECD countries in Turkey between 1982 and 2007. Employing a knowledge-capital model, this study finds that joint national incomes, per capita difference, investment liberalisation and the cost of exporting to Turkey have significant effects on FDI in Turkey. In addition, the prospect of European Union membership, government stability, infrastructure, bilateral exchange rate, exchange rate volatility and openness to trade play an important role in determining the amount of FDI in Turkey. Finally, this study finds that high relative unit labour costs and corruption provide stimuli to FDI.
    Keywords: Foreign direct investment; knowledge-capital framework; EU membership; Turkey
    JEL: F23 F21 C33
    Date: 2011–07–19
  5. By: Sahbaz, A
    Abstract: The aim of this study was re-debated in recent years begun to test whether current account deficits are sustainable. Our study has been tested with monthly data 2001:3-2011:4 period, used by Husted (1992) intertemporal model. According to the Johansen co-integration analysis, in Turkey’s economy between export and import series were found the long-term co-integration relationship. The empirical results indicate that the current account deficits are sustainable in the long run in Turkey.
    Keywords: Current Account Deficits; Sustainability; Co-Integration; Error Correction Model
    JEL: F30 C22 C01
    Date: 2011–10–15
  6. By: Ali, Heba
    Abstract: Inflation as a phenomenon has witnessed remarkable changes starting from mid-eighties of the last century. Inflation rates have become less persistent, less responsive to supply side shocks. In addition, the relative importance of demand pull inflation as one of the major determinants of inflation has decreased due to efficient monetary policies that have been adopted by central banks all over the world to reduce inflation based on anchoring inflation expectations. Moreover, the slope of Phillips curve has flattened as many factors have appeared to be more influential on inflation rather than output gap, namely inflation expectations. These changes constitute in the new economic literature what so called “Inflation Dynamics”. In this context, this study focuses on analyzing inflation dynamics in Egypt in (1980-2009) in order to identify to what extent “Inflation Dynamics” in Egypt is different from or similar to those witnessed globally. The study applied a Vector Auto Regressive model (VAR) and other econometrics models to analyze “Inflation Dynamics” in Egypt in three sub periods: the 1980s, the 1990s and the first decade of the new millennium. The study concluded that Inflation Dynamics in Egypt is completely different from those observed globally. Inflation rates in Egypt have become more persistent especially starting from 2000; Inflation shocks are now lasting longer and have a long-term impact on the future inflation paths. On the other hand, demand bull inflation still considers one of the most important inflation determinants, as it is solely responsible for explaining 30% of the changes in inflation rates. In addition, the study confirmed that inflation rates in Egypt have become more responsive to supply side shocks starting from 2006. As for the slope of Phillips curve, the study confirmed that similar to the changes observed globally, the slope of Phillips Curve for the Egypt economy has flattened reflecting the increasing importance of other inflation determinants rather than output gap.
    Keywords: Inflation; Inflation dynamics; Inflation persistence; The Egyptian economy; Demand-pull inflation; Cost-push inflation; Inflation expectations; markets and prices rigidities; Phillips curve; Government debt; Monetary policies; Vector Auto Regression (VAR)
    JEL: E31
    Date: 2011–05–19
  7. By: Carrere, Celine; Gourdon, Julien; Olarreaga, Marcelo
    Abstract: This paper builds on theoretical predictions that show that gains from regional integration are unevenly distributed between resource rich and poor countries. It explores the effects of different integration schemes in the Middle East and North Africa. The results suggest that within the Pan Arab Free Trade Agreement, there is significant trade creation for resource poor countries associated with regional integration, and no evidence of trade diversion. In resource rich countries, however, there is evidence of pure trade diversion in both resource-rich/labor-abundant countries and resource-rich/labor-importing countries. This underscores the idea that regional integration can help to spread the benefits of unevenly distributed resource wealth among the region's economies.
    Keywords: Free Trade,Trade Law,Trade Policy,Economic Theory&Research,Trade and Regional Integration
    Date: 2012–02–01
  8. By: Mim, Sami Ben; Ali, Mohamed Sami Ben
    Abstract: This paper studies the remittances' effect on economic growth. Using panel data techniques, the authors estimate several specifications to provide support of such relationship for MENA countries over the period 1980-2009. The findings provide new robust evidence on how remittances are used in MENA countries and show the main channels which may interfere in this process. Estimation outcomes show that the most important part of remittances is consumed and that remittances stimulate growth only when they are invested. Moreover, empirical results suggest that remittances can enhance growth by encouraging human capital accumulation. Human capital is therefore an effective channel through which remittances stimulate growth in MENA countries. --
    Keywords: Workers' remittances,economic growth,panel data,MENA zone
    JEL: E21 F21 G22 J61 O16
    Date: 2012
  9. By: Santeramo, Fabio Gaetano; Cioffi, Antonio
    Abstract: The paper investigates the effects of the entry price scheme for fresh fruit and vegetables. The analysis is conducted on the European prices of tomatoes, lemons and apples for some of the main competing countries on the European domestic markets: Morocco, Argentina, Turkey and China. The econometric analysis is based on testing and estimating a switching vector autoregressive model with endogenous threshold entry price level. The model shows the isolation effects and the accumulation of Standard Import Values above the trigger entry price. This paper contributes to clarify the role played by the Entry Price System in avoiding or deterring low priced imports from main European partner Countries.
    Keywords: Trade policy; Non-tariff barrier; Entry price system; Fruits and vegetables; TVAR
    JEL: F13 Q17 Q18
    Date: 2012–01–30
  10. By: Giuseppe Campesi
    Abstract: The so-called Arab Spring has thrown out of kilter the precarious balance on which the Euro-Mediterranean border-control regime has been built over the years, illustrating the need to set this regime on a new foundation. The breaking point in the crisis came when the flow of migrants landing on Italian shores in Lampedusa took a spike at the beginning of this year. I analyze how the Italian government manufactured the Lampedusa crisis by matching a discursive rhetoric to government strategy, and I highlight how the sovereign prerogative to define emergency was questioned at both a supranational and a subnational level. I also discuss the main assumption behind securitization theory, exploring the complex web of political and institutional relationships involved in the securitization process and illustrating the ambiguity of the security language deployed by the main securitizing actors. Finally, I look at the possible outcomes of the crisis by looking at the interests involved when it comes to reconfiguring the power to define and govern emergency within the framework of the European border-control regime.
    Date: 2011–11–15
  11. By: Abdelaziz Benkhalifa; Mohamed Ayadi; Paul Lanoie (IEA, HEC Montréal)
    Abstract: This paper reports the first study of compensating wage differentials for work-related fatalities in an African country. Using original data from the 2002 Tunisian Caisse nationale de la sécurité sociale, statistically significant compensating wage differentials are found. The implied value of life is $ 643800 (US $ 2000).
    Keywords: Compensating wage differentials; Value of life
    JEL: J17 J28 J31
    Date: 2012–01
  12. By: Piotr Kozarzewski; Richard Woodward; Mehdi Safavi
    Abstract: After a long period in which state-led development was the dominant economic paradigm, since the 1980s private sector development has been the focus for economic policy makers. It is probably no coincidence that economic growth, stagnant for a few decades in much of the developing world, took off in the 1990s after this policy shift, and has generally remained high (in spite of a wave of crises and recessions in the late 1990s and early 2000s). Privatization has made a great deal of progress in the developing world, particularly in Latin America, though the Middle East and North Africa (MENA) have lagged somewhat.
    Keywords: Private sector, Privatization, Business climate, Middle East, North Africa, Latin America, Post-communist, Central and Eastern Europe
    JEL: L32 L33 L50 O16 O17 P33
    Date: 2012
  13. By: Bielsa, Jorge; Cazcarro, Ignacio; Sancho, Yolanda
    Abstract: A distinction is commonly drawn in Hydrology between ‘green’ and ‘blue water’ in accounting for total water availability in semi-arid regions. The criterion underlying this classification is important for successful water management, because it reveals how much natural water is and/or could be used by households, industry and, especially, agriculture. The relative share of green and blue water is generally treated as a constant. In recent years, a growing hydro-geological literature has focused on a phenomenon that significantly affects the stability of the green/blue water ratio. This is the increase in land cover density and its impact on runoff in regions with a Mediterranean climate, such as the Ebro Basin in Spain. We seek to carry this knowledge over into the parameters of disciplines concerned with the economic valuation of water and territorial resources, and translate it into the language used by water management professionals in the expectation that this contribution will improve the way we assess and account for real water availability. The heart of the matter is that the increasing density of forest cover produces both positive and negative environmental and economic impacts, presenting new economic and environmental problems that must be examined and assessed in a hydrological-economic context. We will show that these positive and negative effects are sufficiently important to merit attention, whether they are measured in physical or economic terms. Finally, we make an initial proposal for the economic valuation of some of the effects produced by these hydrological changes.
    Keywords: blue water; green water; hydro-economic framework; water resources accounting
    JEL: Q23 Q24 Q01 Q25
    Date: 2011

This nep-ara issue is ©2012 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.