nep-ara New Economics Papers
on Arab World
Issue of 2012‒07‒08
eight papers chosen by
Quentin Wodon
World Bank

  1. Natural Resources, Volatility, and Inclusive Growth: Perspectives from the Middle East and North Africa By Rabah Arezki; Mustapha K. Nabli
  2. Asymmetric demographic pressure in South-Mediterranean versus North-Mediterranean economies and its impact on international gross capital flows By Peeters, Marga
  3. Monetary Policy Transmission in the GCC Countries By Raphael A. Espinoza; Ananthakrishnan Prasad
  4. Study of Economic Globalization and Growth of Agricultural Sector of Iran By Nabieyan, Sedigheh; Satrasala, Suryaprakash
  5. Export Activity and Productivity: New Evidence from the Egyptian Manufacturing Industry By Youssouf KIENDREBEOGO
  6. Financial Factors and Manufacturing Exports:Theory and Firm-level Evidence From Egypt By Youssouf KIENDREBEOGO; Alexandru Minea
  8. Price Transmission Subject to Security‐based Trade Barriers in the Context of the Israeli‐Palestinian Conflict By Ihle, Rico; Rubin, Ofir D.

  1. By: Rabah Arezki; Mustapha K. Nabli
    Abstract: This paper takes stock of the economic performance of resource rich countries in the Middle East and North Africa (MENA) over the past forty years. While those countries have maintained high levels of income per capita, they have performed poorly when going beyond the assessment based on standard income level measures. Resource rich countries in MENA have experienced relatively low and non inclusive economic growth as well as high levels of macroeconomic volatility. Important improvements in health and education have taken place but the quality of the provision of public goods and services remains an important source of concerns. Looking forward we argue that the success of economic reforms in MENA rests on the ability of those countries to invest boldly in building inclusive institutions as well as high levels of human capacity in public administrations.
    Keywords: Business cycles , Commodity prices , Economic growth , Education , Emerging markets , Human capital , Infrastructure , Middle East , Natural resources , North Africa , Public investment ,
    Date: 2012–05–07
  2. By: Peeters, Marga
    Abstract: According to the life-cycle theory, countries with high and rising youth ratios or high and rising old-age ratios tend to have low savings relative to investment, which depresses their capital outflows. This paper puts life-cycle theory to the test and studies the impact of demographic change on international capital flows in the Middle East and North Africa (MENA) and the Southern European countries Greece, Italy, Spain and Portugal (GISP). These two regions are asymmetric in that MENA has a young population whereas the population of GISP has been ageing rapidly. Moreover, MENA has a lower standard of living an is a much more closed economy, which may effect the ability to save and its impact on cross-border capital flows. The empirical analyses in this paper cover the period 1980-2011 and partly support the life-cycle theory for these two regions. Youth rates depressed domestic savings significantly in both the MENA and GISP regions, while ageing as well as population growth had a positive impact in the GISP region. Also, domestic savings significantly caused international capital flows.
    Keywords: Demography; international capital flows; savings; ageing;
    JEL: F4 F2 F3 D91 C31 E21 J11
    Date: 2012–06–24
  3. By: Raphael A. Espinoza; Ananthakrishnan Prasad
    Abstract: The GCC countries maintain a policy of open capital accounts and a pegged (or nearly-pegged) exchange rate, thereby reducing their freedom to run an independent monetary policy. This paper shows, however, that the pass-through of policy rates to retail rates is on the low side, reflecting the shallowness of money markets and the manner in which GCC central banks operate. In addition to policy rates, the GCC monetary authorities use reserve requirements, loan-to-deposit ratios, and other macroprudential tools to affect liquidity and credit. Nonetheless, a panel vector auto regression model suggests that U.S. monetary policy has a strong and statistically significant impact on broad money, non-oil activity, and inflation in the GCC region. Unanticipated shocks to broad money also affect prices but do not stimulate growth. Continued efforts to develop the domestic financial markets will increase interest rate pass-through and strengthen monetary policy transmission.
    Keywords: Bahrain , Cooperation Council for the Arab States of the Gulf , Economic models , Interest rates , Kuwait , Monetary policy , Monetary transmission mechanism , Oman , Qatar , Saudi Arabia , United Arab Emirates , United States ,
    Date: 2012–05–18
  4. By: Nabieyan, Sedigheh; Satrasala, Suryaprakash
    Abstract: After an inward-looking strategy during the Iran-Iraq war (1980-1988), Iran has moved towards a more liberalized and open market structure. So this paper studied the effect of the process of economic globalization on agricultural sector of Iran. Sinha’s growth model was used to estimate the relationship between globalization factors and growth in agricultural sector. The stationarity of variables, Engle-Granger’s causal relationships and co-integration relationship between variables were determined. An error correction framework was applied to capture the short-run and the long-run dynamic in the growth model. Opened economy could be a cause of investing in agricultural sector, and agricultural investment could be cause of openness. No long-run equilibrium relationship observed between FDI and agricultural value addition and between FDI and agricultural investment. Openness would increase investment and growth in agricultural sector. Agricultural growth was observed to be based on labour than the investment in short-run, whereas in long-run it is mostly based on investment.
    Keywords: Engle-Granger’s causal relationships, Error correction model and Globalization, International Relations/Trade, Public Economics, Research Methods/ Statistical Methods,
    Date: 2012
  5. By: Youssouf KIENDREBEOGO (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This study addresses on the relationship between export participation and firm-level productivity. Using comprehensive data for Egypt, we find that total factor productivity and labor productivity are significantly higher in exporters than in non-exporters. When we differentiate between pre-entry and post-entry differences in productivity performance and after controlling for potential endogeneity problem, we find that this exporter premia is driven by the learning-by-exporting hypothesis. We find no evidence that more productive firms self-select into export markets. Exporting makes firms more productive but more productive firms do not necessarily self-select into exporting.
    Keywords: Productivity Performance;Exports
    Date: 2012–06–21
  6. By: Youssouf KIENDREBEOGO (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Alexandru Minea (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This paper focuses on the effects of financial factors on manufacturing firms' export participation. Using a simple dynamic discrete choice model, we firstpresent the intuition according to which financial constraints reduce the probability of exporting. Then, based on a panel of Egyptian manufacturing firms over the 2003-2008 period, we estimate the impact of financial constraints on export market participation. Our main results show that, unlike financial liquidity, financial constraints reduce the export participation of Egyptian firms. In addition,financial constraints equally have a negative impact on alternative measures of the export activity, namely the export intensity and the hazard rate of entry into exporting.
    Keywords: Financial Constraints;Exports;Firm-Level Evidence;Sunk Costs
    Date: 2012–06–21
  7. By: DiSegni, Dafna M.; Zvika, Neeman; Feder, Amity
    Keywords: Agricultural and Food Policy, Resource /Energy Economics and Policy,
    Date: 2012
  8. By: Ihle, Rico; Rubin, Ofir D.
    Abstract: Israel’s imposition of military security measures in the Palestinian territories as a consequence of the long-lasting violent conflict yields depressing economic effects to all parties involved. One crucial implication is the limited ability to carry out trade which brings about welfare losses. This paper assesses the consequences of the Israeli-Palestinian conflict on price dynamics of agricultural trade between Israel and the West Bank by analyzing daily wholesale prices subject to movement restrictions. An exogenous regime switching cointegration model is estimated using a novel extension of the Johansen estimation method. We find Hebron and Tel Aviv wholesale markets to be integrated for the main trading products. Deviations from price equilibrium are quickly adjusted for. The model suggests that the movement restrictions temporarily cut off both markets from each other. Welfare implications of the closures depend on the direction of trade, harming both Palestinian and Israeli consumers.
    Keywords: Agricultural trade, cointegration, exogenous regime-switching, Israel, Middle East, Palestinian territories, price transmission, violent conflict, Agricultural and Food Policy, Demand and Price Analysis, Food Security and Poverty, International Relations/Trade, C32, D74, Q11, Q13, F15,
    Date: 2012–08

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.