nep-ara New Economics Papers
on Arab World
Issue of 2012‒04‒23
seven papers chosen by
Quentin Wodon
World Bank

  1. International financial integration of Mediterranean economies : A bird’s-eye view By Peeters, Marga; Sabri, Nidal Rachid
  2. Turkey: Slowdown? Or even recession? By Josef Pöschl
  3. The impact of exchange rate volatility on trade integration among North and South Mediterranean countries By Sabri, Nidal Rachid; Peeters, Marga; Abulaben, Diama K.
  4. International entrepreneurship and technological capabilities in the Middle East and North Africa By Brach, Juliane; Naudé, Wim
  5. Why do large firms go for Islamic loans? By Weill, Laurent; Godlewski, Christophe
  6. Globalisation and the Ottoman Empire: A study of integration between Ottoman and world cotton markets By Laura Panza
  7. Input-Output Modelling in the MENA Region - A case study for Morocco By Britta Stöver; Kirsten S. Wiebe; Dr. Ulrike Lehr; Dr. Marc I. Wolter

  1. By: Peeters, Marga; Sabri, Nidal Rachid
    Abstract: In light of the unprecedented developments in the financial sectors of developed economies in the years 2008-2009 and in view of the current political Arab upheaval, this paper reviews the pros and cons of financial integration of the South-Mediterranean region. Our analyses includes Morocco, Algeria, Tunisia, Libya, Egypt, Palestine, Jordan, Lebanon and Syria. It focuses on financial integration indicators, as well as financial stability, and compares the South-Mediterranean region with other regions worldwide.
    Keywords: financial integration; international finance; financial stability; international capital flows; stock exchanges; bond markets; cross-border banking; exchange rates
    JEL: G11 F3 O16 F21
    Date: 2012–03–27
  2. By: Josef Pöschl (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The growth of Turkey's economy was over 10% year-on-year in some quarters of the period 2010-2011. It may have decelerated recently, but it is not yet certain that this will lead to a more or less soft type of ‘landing’; a swift resumption of growth is feasible. In 2011, thanks to high real growth and a rate of inflation between 5% and 10%, growing budget revenues offered a nice opportunity to increase expenditures and decrease the budget deficit at the same time. This 'pro-active' fiscal policy will continue. The central bank, too, supports GDP expansion by keeping the policy rate low. However, this job is a bit tricky. The rate of inflation should not climb over 10%, and the exchange rate should remain rather stable. The high deficit in the current account is a main source of vulnerability. In the case of no major adverse external shock, growth is likely to accelerate again in 2013-2014.
    Date: 2012–03
  3. By: Sabri, Nidal Rachid; Peeters, Marga; Abulaben, Diama K.
    Abstract: The volatility of exchange rates leads to a reduction of international trade volumes, especially in emerging economies including the South Mediterranean countries. This study discusses the impact of exchange rates on bilateral South- North trade flows, which comes timely after the increased volatility between the Euro and Arab national currencies during the last few years and after the global financial crisis of 2008 that led to a sharp reduction at that time. We investigate the impact of exchange rate volatility on trade using monthly time series for the last ten years from 2000 up to 2011. By means of a Vector Auto Regression model with eXogenous variables (VARX) we estimate the reactions of bilateral exports and imports in response to exchange rate fluctuations between South and North Mediterranean economies. A sample of three South Arab countries is selected including Egypt, Jordan, and Morocco. Causality tests are conducted to examine the hypotheses. Our results show that the exports of goods from Egypt to the European Union decreases in comparison with the baseline by about 3% in case of an appreciation of 10% of the Egyptian pound vis-à-vis the euro, while the imports of Egypt from the EU increase by almost 10%. Also for Morocco, the imports from the EU react much stronger than the exports to the EU to a similar size appreciation of the Moroccan dirham. Jordan is less import-dependent, though reacts strongly in terms of exports if its dollar-pegged currency appreciates vis-à-vis the euro. Finally, we can conclude that the actual exchange rate changes are quite high.
    Keywords: international finance; trade; integration; Mediterranean; volatility; econometric modeling; Vector Autoregressions
    JEL: F4 C3 P45 F3 O16
    Date: 2012–03–27
  4. By: Brach, Juliane (University of Copenhagen and German Institute of Global and Area Studies, Hamburg); Naudé, Wim (UNU-MERIT/MGSoG, University of Maastricht)
    Abstract: In this paper we investigate the extent of international entrepreneurship in Algeria, Egypt, Morocco, Oman and Syria using a dataset covering 3,281 firms. We find that weak technological capabilities constrain internationalization. Firms with ISO accreditation, an own website, and those who have introduced new technology have a higher probability of entering export markets than otherwise. Firms in high-tech sectors are more likely to export early. However with foreign shareholding this advantage of high-tech firms disappears. The results suggest that early international entrepreneurs may need to pay more in informal payments if they want to increase the share of their exports once they have entered into export markets. We derive implications for policy and further research.
    Keywords: International entrepreneurship, exports, entrepreneurial capabilities, innovation, Middle East, North Africa, MENA
    JEL: L26 L25 M16 O55 F23
    Date: 2012
  5. By: Weill, Laurent (BOFIT); Godlewski, Christophe (BOFIT)
    Abstract: This paper examines motivations for large firms to choose an Islamic loan over a conventional loan. This investigation helps understanding the causes of the expansion of Islamic finance activities. We employ a dataset of Islamic and conventional syndicated loans from countries from the Middle East and from Southeast Asia for the period 2001-2009, testing determinants for the choice of an Islamic loan at the facility, firm, and country level. We find that loan characteristics do not influence the choice of an Islamic loan, suggesting that borrowers asking for an Islamic loan are not rationed in terms of maturity and amount. The quality of the borrower does not lead to influence the choice of an Islamic loan, meaning that Islamic loans are not associated with a different default risk than 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: 2012–04–13
  6. By: Laura Panza (School of Economics, La Trobe University)
    Abstract: The Ottoman Empire underwent a process of integration with the global economy during the second half of the Nineteenth Century. This paper explores one aspect of this process, examining the linkages established between the cotton industries in Egypt and Western Anatolia, which we consider as part of the Empire, and the international cotton market during the first wave of globalisation. We undertake a quantitative exploration of the pattern of price transmission between the Ottoman and the international cotton markets over this period, connecting changes in the nature of spatial market integration to major economic and political developments.
    Keywords: Market integration, Globalisation, Ottoman Empire
    JEL: F15 N15 N75 O1
    Date: 2012
  7. By: Britta Stöver (GWS - Institute of Economic Structures Research); Kirsten S. Wiebe (GWS - Institute of Economic Structures Research); Dr. Ulrike Lehr (GWS - Institute of Economic Structures Research); Dr. Marc I. Wolter (GWS - Institute of Economic Structures Research)
    Abstract: Science-based policy analysis becomes increasingly important in the globalised world. Complex economic and social structures need to be thoroughly analysed and direct and indirect effects of policy measures should be identified and, if possible, quantified. Economic policy modelling has a long tradition (Almon, 1991) and economic models have over the past decades become more detailed regarding the economic structure and more extensive regarding the non-economic aspects represented in these models. There exist detailed structural economic models for most OECD countries. For newly emerging economies and developing countries only few such models exist. A global database and model environment is provided by the GTAP project, which is frequently used to develop computable general equilibrium (CGE) models. These models use a unique database, which often is not compatible to datasets of national statistic offices. Still, there are countries for which no such structural economic models exist. The macro-economic PRESIMO model for Morocco for example does not include the industry structure of the Moroccan economy. However, analyses at the industry level are important when analysing the development of for example labour markets or energy demand. The economic opportunities from international projects such as DESERTEC (Concentrating Solar Power in the Saharan Region) could be evaluated identifying sectors, which benefit the most. Using the example of Morocco this paper outlines the prerequisites for developing structural economic models and shows application possibilities of these models for simulating the effects of policy measures.
    Keywords: Input-Output modelling, policy analysis, application possibilities
    JEL: O21
    Date: 2012

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