nep-ara New Economics Papers
on Arab World
Issue of 2012‒04‒17
six papers chosen by
Quentin Wodon
World Bank

  1. Transition in the MENA Region: Challenges, Opportunities and Prospects By Vladimir Gligorov; Peter Havlik; Sandor Richter; Hermine Vidovic
  2. Türkiye'de Aşırı Kredi Genişlemeleri ve Belirleyicileri By Binici, Mahir; Köksal, Bülent
  3. What Can Arab Countries Learn From Post-communist Transition? By Marek Dabrowski
  4. Food security and storage in the Middle East and North Africa By Larson, Donald F.; Lampietti, Julian; Gouel, Christophe; Cafiero, Carlo; Roberts, John
  5. Why Do Large Firms Go For Islamic Loans? By Laurent Weill; Christophe Godlewski
  6. A Macroeconomic Analysis of Energy Subsidies in a Small Open Economy: The Case of Egypt By Gerhard Glomm; Juergen Jung

  1. By: Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Sandor Richter (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper discusses the transition agenda and provides the key economic characteristics of selected Middle East and North Africa countries (MENA) in comparison with selected Central, East and Southeast European countries (CESEE). We intend to identify some regularities in transition processes and to draw policy lessons for MENA countries. Among the key challenges facing the MENA region are job creation, fighting corruption, public sector reforms and trade diversification; the way towards a functioning market economy should not necessarily be as long and controversial as in the CESEE. MENA countries had been implementing market-oriented reforms for more than a decade. Together with free trade agreements concluded with the EU, these reforms have contributed to an increase of FDI inflows. Still, MENA countries have been lagging behind in terms of export performance, competitiveness and restructuring. Numerous impediments to trade and FDI in the MENA region need to be overcome, yet the transition will not require a radical overhaul of the existing system. The sine qua non condition is to achieve high per capita GDP growth. There is no guarantee for success – as illustrated by the experience of CESEE. Moreover, the current global crisis makes policy implementation not easier. If anything, future scenarios must reckon with a slow process of improvements and many backlashes. Transitions and sustainable reforms need to be anchored in a supportive international environment. In the case of many CESEE countries, the EU provided such an anchor. In the case of MENA, such a strong anchor is missing. A newly designed international involvement and especially the strengthened role of the EU will play a crucial role. A comprehensive EU-MENA trade agreement, possibly with an intra-MENA (and Turkey) Customs Union arrangement, would be beneficial to both MENA and the EU.
    Keywords: transition, integration, foreign trade, FDI, labour market
    JEL: E24 F13 F53 O2 O43 O57 P52
    Date: 2012–01
  2. By: Binici, Mahir; Köksal, Bülent
    Abstract: Using different credit measures, this study identifies the credit booms in Turkey that have occurred after December 2002, and examines their determinants. We find that the primary factors that have a strong correlation with the probability of a credit boom are the changes in the slope of the yield curve, reel exchange rate, US interest rate and net capital inflows. The results imply that these factors should be considered as important elements in forecasting such events that could threaten financial stability.
    Keywords: Credit booms; financial stability; logit model; Turkey
    JEL: E32 E51 E44 G21
    Date: 2012–01–01
  3. By: Marek Dabrowski
    Abstract: More than a year has passed since the beginning of the political uprising against the authoritarian regimes in the Arab world. But, as demonstrated by the recent dramatic developments in Syria, the process is far from over. Meanwhile nations which have already freed themselves from their authoritarian rulers (Tunisia, Egypt, Libya and Yemen), must decide where to go and how to manage their political and economic changes. To a lesser extent, a similar challenge is being faced by those constitutional monarchies (like Morocco or Jordan) which accelerated reforms in order to avoid political destabilization. Many politicians and experts, especially those from Central and Eastern Europe, suggest their Arab colleagues learn from the experience of the postcommunist transition of the early 1990s. However, while learning from others is always a useful exercise, the geopolitical and socio-economic context of the Arab revolution seems to be different, in many respects, from that of former Soviet bloc countries more than twenty years ago.
    Keywords: Post-communist transition and development issues, Eastern Europe, Caucasus and Central Asia, Middle East and North Africa
    Date: 2012–04
  4. By: Larson, Donald F.; Lampietti, Julian; Gouel, Christophe; Cafiero, Carlo; Roberts, John
    Abstract: In times of highly volatile commodity markets, governments often try to protect their populations from rapidly-rising food prices, which can be particularly harsh for the poor. A potential solution for food-deficit countries is to hold strategic reserves, which can be called on when international prices spike. But how large should strategic stockpiles be? This paper develops a dynamic storage model for wheat in the Middle East and North Africa (MENA) region, where imported wheat dominates the average diet. The paper uses the model to analyze a strategy that sets aside wheat stockpiles, which can be used when needed to keep domestic prices below a targeted price. This paper shows that if the target is set high and reserves are adequate, the strategy can be effective and robust. Contrary to most interventions, strategic storage policies are counter-cyclical and, when the importing region is sufficiently large, a regional policy can smooth global prices. This paper shows that this is the case for the MENA region. Nevertheless, the policy is more costly than the pro-cyclical policy of a targeted intervention that directly offsets high prices with a subsidy similar to food stamps.
    Keywords: Markets and Market Access,Access to Markets,Economic Theory&Research,Emerging Markets,Food&Beverage Industry
    Date: 2012–04–01
  5. By: Laurent Weill (LaRGE Research Center, Université de Strasbourg); Christophe Godlewski (LaRGE Research Center, Université de Strasbourg)
    Abstract: This paper examines the motivations for large firms to choose an Islamic loan over a conventional loan and the recent expansion of Islamic finance activities. We employ a dataset of Islamic and conventional syndicated loans from countries in the Middle East and Southeast Asia for the period 2001-2009, testing determinants for the choice of an Islamic loan at the facility, firm, and country level. From the lenders standpoint, loan characteristics apparently do not influence the decision to offer Islamic loans, nor are they rationed to borrowers in terms of maturity or amount. Moreover, firms taking Islamic loans do not appear to differ in terms of default risk from firms taking conventional loans. We identify three country-level determinants as potential driving forces expanding the preference for Islamic loans. The strongest determinant is religiosity, i.e. the share of Muslim population in a country, but the quality of institutions and level of financial development also play substantial roles.
    Keywords: Islamic banks, loans.
    JEL: G21 G32 O16
    Date: 2012
  6. By: Gerhard Glomm (Indiana University); Juergen Jung (Towson University)
    Abstract: We construct a dynamic general equilibrium model to analyze the effects of large energy subsidies in a small open economy. The model pays special attention to domestic energy production and consumption, trade in energy at world market prices, as well as private and public sector production including the provision of public infrastructure. The model is calibrated to data from Egypt and then used to study policy reforms such as reductions in energy subsidies with corresponding reductions in consumption taxes, labor taxes, capital taxes, or increases in infrastructure investment. We calculate the new steady states, the transition paths to the new steady state and the size of the associated welfare losses or gains. In response to a 15 percent cut in energy subsidies, GDP may fall as less energy is used in production. Excess energy is exported and capital imports are reduced. Welfare in consumption equivalent terms can rise by up to 0.6 percent of GDP. Gains in output can be realized only if the government re-invests into infrastructure.
    Date: 2012–04

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