nep-ara New Economics Papers
on Arab World
Issue of 2013‒03‒16
seventeen papers chosen by
Quentin Wodon
World Bank

  1. Towards a New Eastern Mediterranean Energy Corridor? Natural Gas Developments Between Market Opportunities and Geopolitical Risks By Simone Tagliapietra
  2. Role of Investment Shocks in Explaining Business Cycles in Turkey By Canan Yuksel
  3. Did the Rising Importance of Services Decelerate Overall Productivity Improvement of Turkey during 2002-2007 By Murat Ungor
  4. Some Thought Experiments on the Changes in Labor Supply in Turkey By Murat Ungor
  5. Health reform and service satisfaction in the poor : Turkey By Hazama, Yasushi
  6. Generational Accounting in Turkey By Damla Haciibrahimoglu; Pinar Derin-Gure
  7. Should I stay or should I go? Exploring transition to discouragement By Gürbüz, Ayça Akarcay; Polat, Sezgin; Ulus, Mustafa
  8. Household Expectations and Household Consumption Expenditures : The Case of Turkey By Evren Ceritoglu
  9. The Road to Sustainable Growth in Emerging Markets: The Role of Structural and Monetary Policies in Turkey By Aysan, Ahmet Faruk; Güler, Mustafa Haluk; Orman, Cüneyt
  10. Impact of “De Facto” Bridge Holidays By Ihsan Bozok; Ibrahim Burak Kanli
  11. Systemic Risk Analysis of Turkish Financial Institutions with Systemic Expected Shortfall By Irem Talasli
  12. On the relationship between world oil prices and GCC stock markets By Mohamed El Hedi Arouri; Jamel Jouini; Duc Khuong Nguyen
  13. Modeling the future of knowledge economy: evidence from SSA and MENA countries By Asongu, Simplice A
  14. The Role of Corporate Social Responsibility (CSR) in the Egyptian Banking Sector By Kamal, Mona
  15. Dynamic relationship between energy consumption and income in Tunisia: A SVECM approach By Boufateh, Talel; Ajmi, Ahdi Noomen; El Montasser, Ghassen; Issaoui, Fakhri
  16. سياسات تعزيز القدرة التنافسية لصادرات المشروعات الصغيرة والمتوسطة المصرية By Elasrag, Hussein
  17. المؤشرات الاقتصادية وثيقة الارتباط بالاستثمار الحالة المصرية قبل وبعد ثورة 25 يناير 2011 By Abdelaal Mahmoud, Ashraf

  1. By: Simone Tagliapietra (Fondazione Eni Enrico Mattei)
    Abstract: The Eastern Mediterranean region is rapidly changing. The turbolent political transition in Egypt after the Arab Spring, the civil war in Syria, the emergence of Turkey as leading regional power, the tensions between Israel and Gaza and the never-ending dispute between Turkey and the Republic of Cyprus are -all together- reshuffling the regional geopolitical equilibrium. At the same time natural gas findings are flourishing in the offshore of Egypt, Israel, and Cyprus, reshaping the regional energy map and rapidly making the Eastern Mediterranean a world-class natural gas province. These geopolitical and energy pressures are rapidly converging, generating a number of new challenges and opportunities for each player in the region. The aim of this paper is to provide a comprehensive overview on these new regional developments and to propose a critical discussion of the market opportunities and geopolitical risks related to the potential emergence of a new Eastern Mediterranean Energy Corridor.
    Keywords: Eastern Mediterranean, Natural Gas, Energy Geopolitics, Turkey, Israel, Egypt, Cyprus, Lebanon, European Union, Security of Gas Supply, Energy security
    JEL: Q40 Q42 Q48
    Date: 2013–02
  2. By: Canan Yuksel
    Abstract: This paper aims to understand the role of investment shocks in explaining output fluctuations observed in Turkish economy. For this purpose a small open economy DSGE model is estimated on Turkish data for 2002:1-2012:2 period by Bayesian methods. Variance decomposition analysis shows that permanent technology shock is the key driving force of business cycles in Turkish economy and the role of investment shock is less spelled.
    Keywords: Open economy, Bayesian estimation, Business cycle
    JEL: E3 F4 C11
    Date: 2013
  3. By: Murat Ungor
    Abstract: When examined in isolation, the 2002-2007 period in Turkey stands out as a high growth period. However, the relative performance of Turkey in this period is weaker compared to China. The service sector in Turkey had the lowest labor productivity growth rate. Counterfactual experiments based on a three-sector model point out that the service sector represented a drag on aggregate productivity in Turkey. Using a newly constructed detailed sectoral database for China, I argue that if the service sector in Turkey had had the same annual productivity growth rates as observed in China, then the average annual growth rate of the aggregate labor productivity would have been 7.8% instead of 5.7% during 2002-2007.
    Keywords: Sectoral productivity, services, China, Turkey
    JEL: O11 O40 O57
    Date: 2013
  4. By: Murat Ungor
    Abstract: Turkey has the lowest hours worked (the product of total employment and annual hours per worker, divided by the size of the working-age population) among the OECD countries. We study the changes in hours of work following Ohanian, Raffo, and Rogerson (Journal of Monetary Economics, 2008) and find that the intratemporal first-order condition from the neoclassical growth model accounts for the decline in total hours worked during 1998-2009 in Turkey. Hours worked increased in Turkey since 2009 and the model accounts for half of that increase between 2009 and 2011. Our findings suggest that time-varying taxes on consumption and labor play significant roles in explaining the hours worked in Turkey. The subsistence term is quantitatively important during 2003-2011. The presence of government consumption in the utility function does not seem very important.
    Keywords: Labor supply, employment, hours of work, growth model, taxes, Turkey
    JEL: E13 E20 E60 J22 O50
    Date: 2013
  5. By: Hazama, Yasushi
    Abstract: Turkey began to reform its health care system in 2003 and introduced universal health insurance in 2008. This paper tests the effect of health reform in Turkey on satisfaction in the poor with public health services. An ordered logit model is applied to a pooled dataset compiled from the Life Satisfaction Survey (N=60,281) by the Turkish Statistical Institute during the period from 2003 to 2011. The results reveal that at the outset the lowest 30% income group was less satisfied than the highest 70% income group but this satisfaction gap dissipated after 2004 and did not reappear during the post-reform period (2009-2011).
    Keywords: Turkey, Public health, Health insurance, Health care
    JEL: I18
    Date: 2013–02
  6. By: Damla Haciibrahimoglu (Department of Economics, METU); Pinar Derin-Gure (Department of Economics, METU)
    Abstract: Generational Accounting (GA), developed by Auerbach. Gokhale and Kotlikoff (1991) is an alternative and dynamic method employed in measuring the impact of existing fiscal policies on current and future generations. In contrast to the traditional and static measures of fiscal sustainability, GA method reveals the intergenerational distribution of tax burden and helps identifying the policies that can alleviate the generational imbalance. This paper constructs and presents the first set of generational accounts for Turkey in an attempt to measure the generational gap and compare the Turkish intergenerational fiscal outlook to a number of developed and developing countries. Findings in the paper suggest that there exists a 24.3% fiscal imbalance to the disadvantage of future generations in Turkey. Several hypothetical policy experiments have been implemented in the paper to achieve the generational balance in Turkey.
    Keywords: Generational Accounting, Fiscal Sustainability, Turkish Fiscal System
    JEL: H61 H62 E62 J18
    Date: 2013–01
  7. By: Gürbüz, Ayça Akarcay (Galatasaray University Economic Research Center); Polat, Sezgin (Galatasaray University Economic Research Center); Ulus, Mustafa (Galatasaray University Economic Research Center)
    Abstract: Over the last decade, alongside high unemployment rates, the number of discouraged workers remained high in Turkey indicating a structural problem of the labor market. Moreover, the ratio of men among discouraged workers is particularly important compared to other OECD countries where the discouragement is thought to be related to gender issues. Discouraged worker literature mainly investigates differences in the transition rates from unemployment and discouragement into employment. Few studies, however, explicitly explore who becomes discouraged and why. In the Turkish labor market, the average transition from unemployment into discouragement is important and displays vast inter-regional disparities implying that local labor market (LLM) conditions matter. This paper aims to address factors affecting transition to discouragement in the Turkish labor market using pooled cross-section data from household labor force surveys for the period between 2006 and 2011, considering individual and household characteristics, as well as various LLM conditions. Our findings indicate that low qualifications and poor market conditions both lead to higher discouragement.
    Keywords: Discouraged workers; Local labor market; Transition; Cross-section data; Job search
    JEL: C31 J21 J64 R23
    Date: 2013–03–10
  8. By: Evren Ceritoglu
    Abstract: The empirical analysis confirms that household expectations have a direct role on their consumption and saving behaviour in addition to their indirect influence through the income channel. The econometric results show that there is a positive and statistically significant relationship between the growth of consumption and expected income changes. Therefore, the strict version of the rational expectations permanent income hypothesis (REPIH) is rejected for the Turkish economy. The empirical analysis reveals that the expansion of the real consumer credit volume is more important on the growth of consumption than the real interest rates. Moreover, there is a positive and statistically significant relationship between the Job Opportunities Index from the TURKSTAT-CBRT Consumer Tendency Survey and the growth of consumption. Household expenditures on durable goods are more sensitive to changes in household expectations, the real interest rates and consumer credits than household expenditures on non-durable goods and services. As a result, the econometric results are in favour of the precautionary saving hypothesis.
    Keywords: Household expectations, Household consumption, Durable goods
    JEL: D81 D84 E21
    Date: 2013
  9. By: Aysan, Ahmet Faruk; Güler, Mustafa Haluk; Orman, Cüneyt
    Abstract: The last decade witnessed an unprecedented economic growth in Emerging Market Economies (EMEs). EMEs have also been the main drivers of growth in the recovery following the global financial crisis. Nevertheless, EMEs continue to face a number of institutional and structural challenges that may pose risks to the sustainability of their recent growth performance, with potentially significant repercussions for the world economy. In this paper, we present a detailed account of Turkey’s experience in dealing with various institutional and structural challenges during the last decade and provide evidence that taking the right steps can enable EMEs materialize their full growth potential going forward. Successful institutional and structural reforms can also provide room for monetary policymakers to effectively navigate their economies through turbulent times such as the recent global financial crisis.
    Keywords: Economic Growth, Structural and Institutional Reforms, Crises, Monetary Policy, Turkey, Central and Eastern Europe
    JEL: E52 E63 F30 F43 N10 O10
    Date: 2013–02–26
  10. By: Ihsan Bozok; Ibrahim Burak Kanli
    Abstract: [EN] In this note, we focus on the significance of the effect of bridge-days, which are defined as extra day-offs between two successive official holidays or between a holiday and a weekend, on the seasonal adjustment process by taking industrial production (IP) as our laboratory. To this end, a bridge-day variable is constructed for Turkey. Additionally, we investigate whether eves of religious feasts and Republic Day which are currently assumed to be fully worked in by TurkStat should be treated as half-day holidays in seasonal adjustment. We find evidence that modifying the currently used working day variable in the way to incorporate these days improve the seasonal adjustment process significantly and hence, half day offs have an impact on IP. More importantly, results reveal that religious bridge-days are highly influential on IP, while any significant impact cannot be claimed for national bridge-days. As a matter of fact, bridge-day adjusted IP follows a remarkably more stable pattern compared to the officially announced data, providing evidence that bridge-day effect has been a major factor lying behind the recent volatile course of IP. Finally, we conclude that bridge days should be taken into account to remove bridge-day induced fluctuations and make proper inferences regarding the dynamics of working-day sensitive variables. [TR] Bu notta, birbirini takip eden iki resmi tatil veya bir resmi tatil ile hafta sonu arasinda kalan ve ek tatil yapilabilecek calisma gunu olarak tanimlanan kopru gunlerinin mevsimsellikten arindirma islemi uzerindeki etkisinin anlamliligi sanayi uretimi verisi uzerinde test edilmistir. Bu amacla, Turkiye icin kopru gunu degiskeni olusturulmustur. Ek olarak, TUIK tarafindan kullanilan calisma gunu degiskeninde is gunu olarak degerlendirilen dini bayramlar ve Cumhuriyet Bayrami’nin arife gunundeki yarim gunluk tatilin sanayi uretimine etkisi incelenmistir. Hali hazirda kullanilan calisma gunu degiskeni yarim gunluk arife gunu tatillerini icerecek sekilde revize edildiginde mevsimsellikten arindirma isleminin onemli olcude iyilestigine dair deliller bulunmustur. Daha onemli olarak, sonuclar dini bayramlar oncesi veya sonrasindaki kopru gunlerinin sanayi uretimi uzerinde belirgin bicimde etkide bulundugunu gosterirken, milli bayramlarla iliskili kopru gunlerinin istatistiksel olarak anlamli olmadigina isaret etmektedir. Kopru gunu etkisi arindirilmis sanayi uretiminin resmi istatistik kurumu tarafindan yayimlanan seriye oranla oldukca istikrarli bir seyir izlemesi, son donemde sanayi uretiminde gorulen dalgali seyrin altinda yatan onemli unsurlardan birinin kopru gunu etkisi olduguna yonelik bilgi saglamaktadir. Sonuc olarak, kopru gunu etkisinden kaynaklanan dalgalanmalari gidererek calisma gunu sayisina duyarli verilerin dinamiklerini daha dogru bir sekilde yorumlayabilmek icin kopru gunlerinin dikkate alinmasi gerektigi dusunulmektedir.
    Date: 2013
  11. By: Irem Talasli
    Abstract: This study utilizes Turkish financial institutions stock market returns and balance sheet data through 2000–2001 banking sector crisis and 2007–2009 global financial crisis in order to investigate applicability of systemic expected shortfall (SES) measure introduced by Acharya et al. (2010). SES is assumed to measure contribution of each institution to systems total risk in case of a financial distress. Our regression results indicate that SES model, which includes both marginal expected shortfall and leverage ratios of institutions calculated prior to the crisis period, explains financial sector losses observed crisis periods better than generally accepted risk measures like expected shortfall, stock market beta and annualized stock return volatility estimated with the same data set. Empirical results have proved that SES is a powerful alternative in tracking potential riskiness of the financial stocks.
    Keywords: Systemic expected shortfall, marginal expected shortfall, systemic risk
    JEL: C21 C58 G01
    Date: 2013
  12. By: Mohamed El Hedi Arouri (EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense); Jamel Jouini (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Duc Khuong Nguyen (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II)
    Abstract: We provide comprehensive evidence on the relationship between oil prices and stock mar-kets for six GCC countries. Unlike previous contributions, a wide range of modern econo-metric techniques are applied in order to: i) capture both short- and long-term interactions between considered markets; ii) deal with the potential asymmetry in such interactions and iii) control for the effects of relevant global financial variables. Empirical results show strong causal linkages in the short-run with the impact direction running usually from oil to stocks, but no long-run links. Stock returns seem also to be more sensitive to negative than to positive oil shocks.
    Date: 2013–03–07
  13. By: Asongu, Simplice A
    Abstract: This paper projects the future of knowledge economy (KE) in SSA and MENA countries using the four components of the World Bank’s Knowledge Economy Index (KEI): economic incentive, education, ICTs and innovation. The empirical evidence provides the speeds of integration as well as the time necessary to achieve full integration. Findings broadly indicate SSA and MENA countries with low levels in KE will catch-up their counterparts with higher levels in a horizon of 4 to 7.5 years.
    Keywords: Knowledge economy; Principal Component Analysis; Panel data; Convergence
    JEL: F42 O10 O38 O57 P0 P00
    Date: 2013–01–15
  14. By: Kamal, Mona
    Abstract: Given the global recognition of Corporate Social Responsibility (CSR) of the financial institutions in developed countries and the lack of interest in the relevance of this concept in Egypt, it is essential to investigate the relation between Corporate Social Responsibility and Financial Performance (i.e. CSR-FP link) in the Egyptian banking sector. This paper explores, empirically, this association. The results imply a negative and statistically significant relationship between CSR-dimensions and banks’ profitability. This empirical evidence is consistent with the neoclassical economists’ point of view that practicing CSR by an organization is associated with competitive disadvantages.
    Keywords: Corporate Social Responsibility (CSR), Egypt, Banking Sector, Profitability.
    JEL: E50 G0
    Date: 2013–03
  15. By: Boufateh, Talel; Ajmi, Ahdi Noomen; El Montasser, Ghassen; Issaoui, Fakhri
    Abstract: This study examines the short-run and long-run dynamics binding energy consumption to GDP using a structural vector error correction (SVECM) model during the period 1971-2009. In addition, a comparative study between Tunisia,the USA and Sweden is conducted. Results spread over two axes. First,the cyclical component of the model indicates that the instantaneous impact of a short run shock on energy is generally positive. However, the impact of this shock on output is positive in the USA and Sweden and negative in Tunisia. Therefore, it seems that unlike a small country like Tunisia where the productive system is directly penalized, developed countries are better able to cope with a transitory shock and find alternatives to productivity gains. Secondly concerning the trend component of the model, we conclude that the effect of a long run shock on energy consumption is positive in Tunisia while it is negative in the USA and Sweden. The effect of a long run shock on production for both the developed countries is positive and increasing. This findings seems interesting insofar as it reflects the willingness of developed countries substitute current energy sources by renewable and cleaner sources. It also reflects Tunisian dependence to current sources of electricity.
    Keywords: Energy consumption, GDP, SVEC model, Tunisia
    JEL: C32 Q43
    Date: 2013–02–15
  16. By: Elasrag, Hussein
    Abstract: Micro, small and medium sized enterprises (M/SMEs) are a dynamic force for sustained economic growth and job creation. They are a valid, crucial component of a vibrant industrial society.M/SMEs stimulate private ownership and entrepreneurial skills; they are flexible and can adapt quickly to changing market demand and supply conditions; they generate employment, help diversify economic activities and make significant contribution to export and trade.Many small projects stalled, especially in light of a great revolution of January 25, 2011. This research aims to study the policies of enhancing the competitiveness of small and medium enterprises.
    Keywords: competitiveness , small and medium enterprises,Egypt
    JEL: E0 L00 L5 L53
    Date: 2013–03–01
  17. By: Abdelaal Mahmoud, Ashraf
    Abstract: Abstract The purpose of this paper is to highlight the global and local economic indicators strictly (tightly)correlated with the investment trend which has a great role in preparing the investment climate to achieve high rates of domestic and foreign investment (Egypt Case :Before and after 25th Jan Revolution). For example, many economic studies have showed a causal correlation between the investment and growth rates, i.e. on one side, improving the investment rates increases the growth rates and on the other side, increasing the growth rate may be considered as an importance factor in attracting more investments especially the foreign one. In addition, studies showed negative correlation between inflation and investment rate, i.e. decreasing the Inflation rates leads to increasing the investment rates as the inflation rate reflects the extent of economic stability and denotes the capability of the central bank of achieving this stability.
    Keywords: NA
    JEL: E2 E22 F21
    Date: 2013–01–15

This nep-ara issue is ©2013 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.