nep-ara New Economics Papers
on Arab World
Issue of 2012‒03‒28
eighteen papers chosen by
Quentin Wodon
World Bank

  1. The impact of FTAs on MENA trade By María Dolores Parra Robles; Inmaculada Martínez-Zarzoso; Celestino Suárez Burguet
  2. Ins and Outs of Unemployment in Turkey By Gonul Sengul
  3. Short-Term Inflation Forecasting Models For Turkey and a Forecast Combination Analysis By Kurmas Akdogan; Selen Baser; Meltem Gulenay Chadwick; Dilara Ertug; Timur Hulagu; Sevim Kosem; Fethi Ogunc; M. Utku Ozmen; Necati Tekatli
  4. Turkiye’de Emek Piyasasinin Cevrimsel Hareketinin Cinsiyet Bazinda Analizi By Yusuf Soner Baskaya; Gonul Sengul
  5. Monetary Policy and Output Gap : Mind the Composition By Harun Alp; Fethi Ogunc; Cagri Sarikaya
  6. Institutional Reforms Debate and FDI Flows to MENA Region: Does One .Best. Fit All? By Mina, Wasseem Michel
  7. Fiyat Degisimlerinin Yapisi ve Enflasyon By M. Utku Ozmen; Orhun Sevinc
  8. Kuresel Kriz, Avrupa Borc Krizi ve Gelismekte Olan Piyasalarda Bulasicilik Etkisi By Doruk Kucuksarac; Pinar Ozlu; Deren Unalmis
  9. Interactions between bank behavior and financial structure: evidence from a developing country By Bakis, Ozan; Karanfil, Fatih; Polat, Sezgin
  10. Climate Variability and Agricultural Productivity in MENA region By Drine, Imed
  11. Firm Productivity, Exchange Rate Movements, Sources of Finance and Export Orientation By Demir, Firat; Caglayan, Mustafa
  12. Growth under Exchange Rate Volatility: Does Access to Foreign or Domestic Equity Markets Matter? By Demir, Firat
  13. The Political Economy of Aid Flows to North Africa By Harrigan, Jane
  14. Freedom of Contract in Islamic Contract Law: an Economic Analysis By Youcef Maouchi
  15. Egypt & Financial Crisis By MANSOUR, Tamer Abdel-Aziz
  16. Working Paper 146 - Bank Financing to Small and Medium Enterprises in East Africa: Findings of a Survey in Kenya, Tanzania, Uganda and Zambia By AfDB
  17. Building an Enlarged Human Development Indicator: Europe and the Southern Mediterranean Basin By Ernest Reig
  18. Price and Income Elasticities of Demand for Oil Products in African Member Countries of OPEC: A Cointegration Analysis By Suleiman , Sa’ad; Muhammad, Shahbaz

  1. By: María Dolores Parra Robles (Universitat Jaume I de Castelló / Spain); Inmaculada Martínez-Zarzoso (Georg-August-Universität Göttingen / Germany); Celestino Suárez Burguet (Universitat Jaume I de Castelló / Spain)
    Abstract: The present work analyses the impact of free trade agreements (FTAs) on the improvement of trade flows for ten Middle East and North African Countries (MENA) for the period 1990-2010. An extended gravity model is estimated to analyse the average and individual impact of six FTAs (four North-South-FTAs and three South- South-FTAs) on exports and imports of Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Israel, Lebanon, Syria and Turkey. The trade effect of the customs union between Turkey and the EU is also analysed. With the aim of obtaining more information about the real impact of the agreement, the analysis is undertaken not only for aggregated trade but also for trade in industrial products and trade in agricultural products separately. In this way, the fact that the text of such agreements distinguishes between industrial and non-industrial products to establish schedules of liberalization is taken into account. The findings indicate that the Euromed FTA has a positive and significant impact on exports from the EU to MENA countries but not the other way around. The only agreement that has a positive and significant impact on both imports and exports is the customs union between the EU and Turkey.
    Keywords: Free Trade Agreements, International Trade, Mediterranean integration, MENA countries, Gravity Equation, Panel Data
    Date: 2012–03–07
  2. By: Gonul Sengul
    Abstract: This paper analyzes rates of inflow to and outflow from unemployment for Turkey since 2006. The average rate of exiting unemployment (outflow) within a month is 9.4 percent, while the average rate of transiting from employment to unemployment (inflow) is 1.3 percent. Moreover, the analysis of flow rates for different age and education groups show that these rates change significantly across groups. The paper decomposes changes in unemployment into contributions from inflow and outflow rates and finds that the volatility of inflow rates is the main driving force of the change in the unemployment rate in Turkey.
    Keywords: Unemployment,Worker Flows, Job Finding Rate, Separation Rate
    JEL: E24 J6
    Date: 2012
  3. By: Kurmas Akdogan; Selen Baser; Meltem Gulenay Chadwick; Dilara Ertug; Timur Hulagu; Sevim Kosem; Fethi Ogunc; M. Utku Ozmen; Necati Tekatli
    Abstract: In this paper, we produce short term forecasts for the inflation in Turkey, using a large number of econometric models. In particular, we employ univariate models, decomposition based approaches (both in frequency and time domain), a Phillips curve motivated time varying parameter model, a suite of VAR and Bayesian VAR models and dynamic factor models. Our findings suggest that the models which incorporate more economic information outperform the benchmark random walk, and the relative performance of forecasts are on average 30 percent better for the first two quarters ahead. We further combine our forecasts by means of several weighting schemes. Results reveal that, the forecast combination leads to a reduction in forecast error compared to most of the models, although some of the individual models perform alike in certain horizons.
    Keywords: Short-term Forecasting, Forecast Combination
    JEL: C52 C53 E37
    Date: 2012
  4. By: Yusuf Soner Baskaya; Gonul Sengul
    Abstract: [TR] Bu notta Turkiye’de bazi temel emek piyasasi degiskenlerinin konjonkturel yapisi cinsiyet bazinda istatistiksel olarak incelenmektir. Toplulastirilmis gostergeler, iktisadi anlamda onem arz eden ve cinsiyet bazinda alt gruplarda gozlenmesi muhtemel heterojen yapiyi gizleyebilmektedir. Bu calismada yapilan analizlerde, konjonkturel dalgalanmalar esnasinda istihdamin kadin ve erkeklerde tamamen zit yonde hareket ettigi ve isgucune katilimin cinsiyet bazinda onemli nitelik ve niceliksel farkliliklar gosterdigi gozlenmistir. Ekonomik daralma donemlerinde erkek istihdami azalirken kadinlarin hem isgucune katiliminin hem de istihdaminin artmasinin, daralma donemlerinde isgucu piyasalarindaki kotulesmeyi ve bu donemlerin ekonomik ve sosyal maliyetlerini sinirlayan muhtemel etkenler arasinda oldugu dusunulmektedir. Issizlikte ise cinsiyet bazinda niceliksel farklar gozlenmekle beraber, niteliksel olarak iki grup birbirine benzemektedir. [EN] This note analyzes the cyclical characteristics of the key labor market indicators in Turkey with respect to gender decomposition, as the aggregate indicators may conceal the heterogeneity across genders that may be important in terms of economic dynamics. Our analysis reveals opposite movements in female and male employment and qualitative and quantitative differences in labor force participation across gender groups. The increase in female employment and labor force participation observed simultaneously with the decline in male employment during downturns appears to be among the possible factors mitigating the economic and social costs of economic downturns in Turkey. Cyclical behavior of unemployment is qualitatively the same for both males and females, although there are quantitative differences across these groups.
    Date: 2012
  5. By: Harun Alp; Fethi Ogunc; Cagri Sarikaya
    Abstract: [TR] Bu calismada Bayesci yontem kullanilarak Turkiye’de çikti acigini temel bilesenlerine ayristiran bir çerçeve sunulmaktadir. Sonuclarimiz, Lehman krizini takip eden surecte Turkiye’de ic ve dis talep arasinda ciddi bir ayrisma yasanirken, ekonomi genelinde asiri bir isinma olmadigini gostermektedir. Bu bulgular, Turkiye Cumhuriyet Merkez Bankasi'nin (TCMB) yeni politika cercevesine zemin hazirlayan ve kayda deger bir enflasyon baskisi olmaksizin hizli kredi buyumesi ve artan cari islemler acigi ile tanimlanabilecek iktisadi gorunume iliskin goruslerini desteklemektedir. Bu kosullar altinda salt toplam cikti acigina dayandirilan geleneksel para politikasi yaklasimi finansal istikrar ile uyumlu olmayan bir politika onermesinde bulunabilecektir. Bu baglamda,cikti acigi bilesenlerinin turetilmesi, tutarli politikalarin tasarlanmasinda karar alicilara yardimci olacaktir. [EN] We estimate an output gap measure for Turkey in a Bayesian framework with special reference to its components. Our results suggest that Turkey experienced a notable divergence between domestic and external demand with no sign of overheating for the whole economy in the post-Lehman crisis period. This finding confirms the basis for the new policy framework of the Central Bank of Turkey (CBT), which was characterized by rapid credit expansion and growing current account deficit without significant inflationary pressures. Under these circumstances, conventional monetary policy practice focusing solely on aggregate output gap may suggest policy prescriptions inconsistent with financial stability. In this regard, extracting the components of output gap would help policymakers make a suitable policy design to avoid any contradiction among objectives.
    Date: 2012
  6. By: Mina, Wasseem Michel
    Abstract: The paper revisits the policy debate on institutional reform approaches to property rights protection and empirically examines it in the context of FDI flows to the Middle East and Northern Africa region (MENA).Using panel data on 11 MENA countries for the period 1991.2007 and adopting feasible generalized least squares estimation methodology, the paper finds a positive influence of improvement in the risk of investment expropriationin non-Gulf Cooperation Council (GCC) MENA countries and of bilateral investment treaties (BITs) in GCC countries. The joint influence of domestic institutional functions and BITs is positive in specifications containing investment expropriation risk and government stability in non-GCC MENA countries, and corruption in GCC countries. Results have important policy implications for the institutional reform approach to be adopted.
    Keywords: property rights protection, bilateral investment treaties, foreign direct investment, institutional reforms, MENA, heterogeneity
    Date: 2011
  7. By: M. Utku Ozmen; Orhun Sevinc
    Abstract: [TR] Bu notta urun bazinda (mikro) fiyatlari iceren genis bir veri seti kullanilarak Turkiye’deki fiyat katiligi incelenmektedir. Fiyat degisimlerinin dagilimi, yonu ve buyuklugu ile fiyatlarin ortalama kalis sureleri analiz edilerek tuketici enflasyon dinamiklerinin tanimsal ozellikleri ortaya konmaktadir. Fiyat degisimleri icin genelde azalislarin da artislar kadar gozlendigi iki-modlu bir dagilim mevcutken, ortalama fiyat artis ve azalis oranlarinin mutlak deger olarak oldukca yuksek ve birbirine yakin oldugu saptanmistir. Ortalama fiyat kalis suresi ise gruplar itibariyla degiskenlik gostermekle birlikte oldukca kisadir. Soz konusu bulgular, Turkiye’de fiyatlarin gelismis ekonomilere ve birçok gelismekte olan ulkeye kiyasla daha esnek olduguna ve mikro fiyatlarin degisim sikliginin ima ettigi enflasyon katiliginin dusuk olduguna isaret etmektedir. [EN] In this note the degree of flexibility of prices in Turkey is assessed by using a large micro data set of product-level prices. Descriptive characteristics of inflation dynamics are depicted by analyzing distribution, size and sign of price changes, and typical price spell lengths. We find that the price changes follow a bi-modal distribution in general, where price decreases are observed as frequent as price increases. Meanwhile, the average size of price increases and decreases are similar and high in absolute value. Duration of an average price spell is shorter than those reported for developed countries and varies across product groups to a large extent. The findings indicate that Turkish consumer prices are considerably more flexible than those of advanced economies and several developing countries. Furthermore, the inflation persistence implied by the frequency of micro level price changes is also low.
    Date: 2012
  8. By: Doruk Kucuksarac; Pinar Ozlu; Deren Unalmis
    Abstract: [TR] Son donemde yasanan krizlerin etkisiyle finansal bulasicilik ekonomi ve finans yazininda en cok tartisilan konulardan birisi olmustur. Bu calismada, gelismekte olan ulkelere iliskin 2002 : 01-2011 : 10 donemi verileri kullanilarak kriz donemlerinde Turkiye’nin ortak soklara goreli tepkisinin farklilasip farklilasmadigi (degisim bulasiciligi) test edilmistir. Degisim bulasiciligi testlerinin sonuclari, son donemde yasanan krizlerde Turkiye’nin diger gelismekte olan ulkelerden ayrismadigini ve ortak soklardan diger ulkeler ile benzer sekilde etkilendigini ortaya koymaktadir. Bu sonuc tum gelismekte olan ulke gruplari ve calismada incelenen tum piyasalar (doviz kuru, sermaye ve tahvil piyasalari) icin gecerlidir. Ote yandan, finansal piyasalarda beklenen getiriler kriz donemlerinde ve normal donemlerde farklilasmakta ve gelismekte olan ulkelere yonelen sermaye akimlarinin kriz donemlerinde tersine dondugu gorulmektedir. [EN] This study investigates whether the response of Turkey to the common shocks during the recent financial crises has changed or not (i.e. tests for shift-contagion) relative to a wide group of other emerging countries for the period 2002 : 01-2011 : 10. The shift contagion tests indicate that the adverse effects of the crisis episodes on Turkish financial markets have been similar to other emerging markets in Europe, Asia and Latin America. This result is common across all country groups and markets (currency, capital and bond markets) investigated in the study. The analysis also shows that the expected returns display a significant shift between the low- and high- volatility regimes and there is a capital outflow from the emerging markets during times of turmoil.
    Date: 2012
  9. By: Bakis, Ozan (Galatasaray University Economic Research Center); Karanfil, Fatih (Galatasaray University Economic Research Center); Polat, Sezgin (Galatasaray University Economic Research Center)
    Abstract: We use time-series analysis to examine bank behavior with respect to credit supply employing both banking data and other financial variables for the Turkish economy over the 1990 – 2009 period. We provide a vector error-correction (VEC) model to test for multivariate cointegration and Granger causality. More specifically, this paper seeks to fill the gap on how the bank behavior interacts with the financial structure given the conditions of macroeconomic policy. Our findings suggest that Granger causality is present between credit-deposit ratio and maturity of time deposits which implies that depositor decision on maturity changes the composition of balance sheet of banks leading to low credit creation. This result implies that macroeconomic uncertainty and instability lead to a kind of credit contraction with the decrease of deposit maturity. Our results also reveal that economic cycles are credit-driven in Turkey.
    Keywords: Credit-deposit ratio; deposit maturity; Granger causality
    JEL: C32 E50 G21
    Date: 2012–03–21
  10. By: Drine, Imed
    Abstract: The Middle East and North Africa (MENA) region is particularly vulnerable to climate change. The severity of climate-change impacts is related to the geographic and ecological particularity of the region. The majority of countries in the MENA region belong to the hydraulic poor regions located between the tempered region of the Northern hemisphere and the inter-tropical region, characterized by scarcity and spatial and temporal rainfall variability. This paper describes, first, the interaction between climate changes, agriculture and food security in the MENA region. Second, an empirical model is used to test the impact of climate variability on agricultural productivity. Our results suggest that lower precipitation, heat waves and drought are the main causes of decreasing agricultural productivity in the region.
    Keywords: agricultural productivity, climate change, MENA region, Malmquist productivity
    Date: 2011
  11. By: Demir, Firat; Caglayan, Mustafa
    Abstract: We investigate the level and volatility effects of real exchange rates on the productivity growth of manufacturing firms with heterogeneous access to debt, and domestic and foreign equity markets in Turkey. We find that while exchange rate volatility affects productivity growth negatively, having access to foreign or domestic equity, or debt markets does not alleviate these effects. Furthermore, foreign owned or publicly traded companies do not appear to perform significantly better than the rest. We detect, however, that rm productivity is positively related to having access to external credit. Additionally, we find that while export (inward) oriented firms are aaffected less (more) by exchange rate appreciations, they are more (less) sensitive to exchange rate volatility.
    Keywords: Productivity growth; Exchange rate volatility; Source of finance; Capital structure; Export orientation
    JEL: G31 F23 G32 F31 F43
    Date: 2012–01–01
  12. By: Demir, Firat
    Abstract: Employing a matched employer-employee dataset, this paper explores the effects of exchange rate volatility on the growth performances of domestic versus foreign, and publicly traded versus non-traded private manufacturing firms in a major developing country, Turkey. The empirical results using dynamic panel data estimation techniques and comprehensive robustness tests suggest that exchange rate volatility has a significant growth reducing effect on manufacturing firms. However, having access to foreign, and to a lesser degree, domestic equity markets is found to reduce these negative effects at significant levels. These findings continue to hold after controlling for firm heterogeneity due to differences in export orientation, external indebtedness, profitability, productivity, size, industrial characteristics, and time-variant institutional changes.
    Keywords: Growth; Foreign Direct Investment; Capital Structure; Exchange Rate Volatility; Manufacturing Sector
    JEL: F22 G31 G15 G32 F31
    Date: 2011–09–01
  13. By: Harrigan, Jane
    Abstract: This paper provides an historical overview of aid flows to North Africa. It assesses the aid allocation process and argues that past aid flows to the region have been heavily influenced by donor political interests. This has reduced the effectiveness of aid which, with the exception of Tunisia, has not been associated with sustained economic growth. The Arab Spring provides an opportunity to reappraise aid flows to North Africa and it is argued that future flows need to support the democratization process, generate pro-poor growth, support social safety nets and address the pressing issues of widening inequalities and unemployment.
    Keywords: aid allocation, aid effectiveness, North Africa
    Date: 2011
  14. By: Youcef Maouchi (CERGAM-CAE, Aix-Marseille Université)
    Abstract: While economic analysis of law is used to develop a better understanding of the role and the impact of contract law, and more generally “western law,” there is no such analysis for Islamic law, one of the world?s largest legal systems. The doorstep in any discussion of contract law — given that private contracts are enforced — being the degree of freedom left to contracting parties, an analysis of contractual freedom under Islamic law is relevant and necessary. This article addresses this question from an economic point of view. First, an overview of Islamic contract law and its system of nominate contracts is provided. Second, we survey the debate among Islamic jurists about contractual freedom fostered by this system. Finally, an economic analysis is conducted.
    Keywords: Contacts, Law and Economics, Islamic contracts law, Freedom of contract
    Date: 2011
  15. By: MANSOUR, Tamer Abdel-Aziz
    Abstract: Financial crisis that occurred in August 2008 was unforeseen, sudden, sharp, and had a great impact on the global financial market. Egypt is one of the countries was affected by this financial crisis as a market economy country, and WTO member. in this paper I will try to study the implication of such crisis on the Egyptian economy in the fields of tourism, Suez canal, oil field, and GDP, not only the economy factor were effected, but also the Egyptian market represented in its components such as stock market, employment, housing market and etc…). What were measures taken by Egypt for the crisis intervention?, this what will we conclude from this paper and examine the fiscal stimulus package taken by Egyptian Government.
    Keywords: Financial crisis;Suez canal;oil field;GDP;measures;fiscal stimulus;Egyptian Government
    JEL: A1 A2
    Date: 2011–12–11
  16. By: AfDB
    Abstract: Bank Financing to Small and Medium Enterprises in East Africa: Findings of a Survey in Kenya, Tanzania, Uganda and Zambia
    Date: 2012–03–16
  17. By: Ernest Reig (Dept. of Applied Economics II, University of Valencia)
    Abstract: This paper calculates a human Wellbeing Composite Index (WCI) for 42 countries, belonging to the European Economic Space, North Africa and the Middle East, as an alternative to the shortcomings of other well-known measures of socio-economic development (i.e. Gross Domestic Product per head and Human Development Index, HDI). To attain this goal, different Data Envelopment Analysis (DEA) models are used as an aggregation tool for seven selected socio-economic variables which correspond to the following wellbeing dimensions: income per capita, environmental burden of disease, income inequality, gender gap, education, life expectancy at birth and government effectiveness. The use of DEA allows avoiding the subjectivity that would be involved in the exogenous determination of weights for the variables included in WCI. The aim is to establish a complete ranking of all countries in the sample, using a three-step process, with the last step consisting in the use of a model that combines DEA and compromise programming, and permits to obtain a set of common weights for all countries in the analysis. The results highlight the distance that still separates Southern Mediterranean countries from the benchmark levels established by some European countries, and also point to the main weaknesses in individual countriesÕ performance. Nordic countries, plus Switzerland, top the list of best performers, while Mauritania, Libya and Syria appear at the bottom.
    Keywords: Wellbeing Composite Index (WCI), Human Development, Data Envelopment Analysis (DEA), Compromise Programming, European and Southern Mediterranean Countries
    Date: 2012–03
  18. By: Suleiman , Sa’ad; Muhammad, Shahbaz
    Abstract: This paper analyses the demand for petroleum products in African member countries of OPEC namely Algeria, Angola, Libya and Nigeria over the period of 1980-2007. For this purpose, econometric models based on time series data are generated for individual products so as to capture product specific factors affecting demand. In doing so, the ARDL bounds testing approach to cointegration is applied to examine the long run relationship among the variables. Four specifications such as total petroleum product demand function, gasoline demand function, diesel demand function and kerosene demand functions have been estimated. The review of trends in the consumption and real prices of the various products suggest that demand for oil products has risen fast due to fast rise in income levels of individuals in these countries as compared to price level. Furthermore, results of estimation show mixed evidence about cointegration between the variables in all the countries studied. The evidence from the estimates show that the diesel demand specification provided satisfactory results in terms of producing expected signs than other specifications. The results for the kerosene model was the least satisfactory as most of the coefficients were found with unexpected signs. Finally the overall result indicates that demand for oil products are more responsive to changes in income than the real prices, both in the short and long run. This result is consistent with the previous studies on developing countries. Finally, the policy implication for result show the need for diversification, increase refining capacity and demand management policies in these countries to promote energy efficiency, conservation as well as discourage cross border smuggling of products and encourage private investment into the oil sector.
    Keywords: Petroleum product demand; ARDL procedure
    JEL: Q43
    Date: 2012–01–03

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