nep-ara New Economics Papers
on Arab World
Issue of 2012‒04‒10
five papers chosen by
Quentin Wodon
World Bank

  1. Non-economic voting and incumbent strength in Turkey By Hazama, Yasushi
  2. Profitability, Saving and Investment of Non-Financial Firms in Turkey By Erdal Ozmen; Saygin Sahinoz; Cihan Yalcin
  3. How vulnerable are Arab countries to global food price shocks ? By Ianchovichina, Elena; Loening, Josef; Wood, Christina
  4. Sektorel Reel Efektif Doviz Kurlari : Turkiye Uygulamasi By Hulya Saygili; Gokhan Yilmaz; Sibel Filazioglu; Hakan Toprak
  5. Has the UAE Escaped the Oil Curse? By Ilham Haouas; Raimundo Soto

  1. By: Hazama, Yasushi
    Abstract: Evidence suggests that incumbent parties find it harder to be re-elected in emerging than in advanced democracies because of more serious economic problems in the former. Yet the pro-Islamic Justice and Development Party (AKP) has ruled Turkey since 2002. Does economic performance sufficiently account for the electoral strength of the AKP government? Reliance on economic performance alone to gain public support makes a government vulnerable to economic fluctuations. This study includes time-series regressions for the period 1950-2011 in Turkey and demonstrates that even among Turkey's long-lasting governments, the AKP has particular electoral strength that cannot be adequately explained by economic performance.
    Keywords: Internal politics, Elections, Political parties, Economic conditions, Turkey, Economic voting
    JEL: D72
    Date: 2012–03
  2. By: Erdal Ozmen; Saygin Sahinoz; Cihan Yalcin
    Abstract: How investment is financed matters a great deal to growth, especially in countries like Turkey, where domestic savings are low and financial systems are not deep enough in supplying the funds needed for growth-generating corporate investment. In these countries there is a close link between selfgenerated corporate savings and investment activity, since access to external funds may be difficult, especially for firms that have little to offer in the way of collateral. When the funds available in the financial system are limited and there is a high external finance premium, corporate savings become even more important to fixed investment. This study analyzes the determinants of corporate savings and whether they enhance investment and ultimately growth. Empirical analysis of data from listed firms shows that in Turkey the savings of nonfinancial firms as a percent of net sales are lower than those of nonfinancial firms in major developing countries. In addition, the financial sector in Turkey is far from adept at attracting savings and mobilizing funds for firms that have to depend on external financing. In fact, the ratio of commercial credits extended to bank dependent firms to GDP is not high even though it has been increasing in recent years. These two factors are the main barriers to investment by nonfinancial firms. In other words, investment activity of financial firms proves to be highly sensitive to cash flows, which suggests that financially constrained firms invest less and thus grew slowly. In many countries corporate savings constitute about half of total savings. Policies that encourage efforts to raise corporate savings can enhance both investment and economic growth. The results of dynamic panel data regressions suggest that both firm-specific and macroeconomic variables explain savings of non-financial firms. For instance, firms’ saving rates seem to increase significantly with profitability, firm size, Tobin’s q, the GDP growth rate, and financial depth. They decline significantly with the ratio of tangible to total assets, the leverage ratio, the ratio of public debt to GDP, and real exchange rate appreciation.
    JEL: G31 E21 D22 L11 C23
    Date: 2012
  3. By: Ianchovichina, Elena; Loening, Josef; Wood, Christina
    Abstract: This paper presents new estimates of pass-through coefficients from international to domestic food prices by country in the Middle East and North Africa. The estimates indicate that, despite the use of food price subsidies and other government interventions, a rise in global food prices is transmitted to a significant degree into domestic food prices in many countries in the Middle East and North Africa, although cross-country variation is significant. In nearly all countries, domestic food prices are highly downwardly rigid. The finding of asymmetric price transmission suggests that not only international food price levels matter, but also food price volatility. High food pass-through tends to increase inflation pressures, where food consumption shares are high. Domestic factors, often linked to storage, logistics, and procurement, have also played a major role in explaining high food inflation in the majority of countries in the region.
    Keywords: Food&Beverage Industry,Markets and Market Access,Emerging Markets,Currencies and Exchange Rates,Food Security
    Date: 2012–03–01
  4. By: Hulya Saygili; Gokhan Yilmaz; Sibel Filazioglu; Hakan Toprak
    Abstract: Bu calismanin amaci Turk Imalat Sanayine ait sektorel reel efektif doviz kuru (REK) endekslerini olusturmaktir. Sektorlere ozgu rekabet ve dis ticaret ortaklarinin farklilastigi dusunuldugunde, sektorel endekslerin imalat sanayi butunu icin hesaplanan endekslerden farkli bir seyir izleyerek, sektorel rekabet gucu gelismelerinin anlasilmasinda daha bilgilendirici olmasi beklenmektedir. REK’ler dis ticaretimizde ilk 10 sirada yer alan imalat sanayi sektorleri icin hesaplanmistir. Hesaplamalarda 38 ticaret ortaginin 2004-2008 donemi ikili ticaret akimlari kullanilmistir. Ulkelerin sektorel efektif doviz kuru endeksleri icindeki agirliklari hem yurtici hem de ucuncu ulke pazarlarina ait rekabeti yansitacak sekilde hesaplanmistir. Son asamada ise kurlar sektorel fiyat endeksleri kullanilarak fiyat etkilerinden arindirilmistir. Sonuclar sektorel REK’lerin sadece sektorler arasi degil ayni zamanda hem UFE hem de TUFE bazli genel REK’lerden de onemli olcude farklilastigini gostermektedir.
    Keywords: Sektorel reel efektif doviz kurlari, Imalat sanayi alt sektorleri, Turk Imalat Sanayi Rekabet Gucu
    JEL: C82 F31 L60
    Date: 2012
  5. By: Ilham Haouas; Raimundo Soto
    Abstract: The UAE is blessed with vast deposits of oil and gas. Contrary to other oil-rich economies, the UAE seems to have escaped from the so-called “oil curse”. We study how the UAE used resource rents to achieve economic development and provide higher welfare for the local population. We identify, nevertheless, symptoms of the resource curse in three areas: very low growth in labor productivity, government policies unable to counteract economic cycles induced by oil-price volatility, and massive overemployment and declining productivity in the public sector. Therefore, we conclude that while the UAE has not been immune to the oil curse, but it has managed to make the benefits outweigh the negative outcomes of oil exporting. We finally study the case of Dubai as an example of how to overcome the dependency on oil exports and diversify the economy by using a combination of market deregulation, support for foreign trade, and efficient provision of infrastructure and institutions for private sector participation.
    Keywords: Natural resources, oil curse, economic growth, export diversifications
    JEL: Q32 O41 F14
    Date: 2012

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