nep-ara New Economics Papers
on Arab World
Issue of 2013‒06‒04
twelve papers chosen by
Quentin Wodon
World Bank

  1. The Role of Knowledge on Economic Growth: The Case of Turkey, 1963-2010 By Fatma M. Utku-İsmihan
  2. Governance and Government in the Arab Spring Hybridity: Reflections from Lebanon By Nora Stel
  3. Inflation Dynamics in Turkey : In Pursuit of a Domestic Cost Measure By Selen Baser; Hande Kucuk; Fethi Ogunc
  4. Micro dynamics of Turkey's export boom in the 2000s By Cebeci, Tolga; Fernandes, Ana M.
  5. The impact of the 2008 crisis on top labor incomes in Turkey: A nonparametric analysis By Tumen, Semih
  6. The Capacity Buildup over the Past Decade and the Capacity Utilization Rate in Turkey By Ufuk Demiroglu; Cagri Sarikaya
  7. How do ICT firms in Turkey manage innovation? Diversity in expertise versus diversity in markets. By Akçomakn Semih; Akdeve, Erdal; Findik, Derya
  8. Diversification and development of the UAE’s economy By Schilirò, Daniele
  9. Poverty and Inequality in the Non-income Multidimensional Space: a Critical Review in the Arab States By Abdel-Hameed Nawar
  10. Output-Employment Relationship across Sectors:A Long- versus Short-Run Perspective By Afsin Sahin; Aysit Tansel; M.Hakan Berument
  11. Shared Perceptions of Green? The perception and acceptance of European Union values and rules in environmental policy in Jordan By Gerau, Jasmin
  12. Social Crisis Prevention: A Political Alert Index for the Israel-Palestine Conflict By André De Palma; Federico Perali; Nathalie Picard; Roberto Ricciuti; Alexandrina Ioana Scorbureanu

  1. By: Fatma M. Utku-İsmihan (TEKPOL, Science and Technology Policy Studies, Middle East Technical University)
    Abstract: The importance of knowledge for long-run economic growth has long been an important research area for economists and policy makers. This paper attempts to analyze the impact of knowledge on economic growth in Turkey over the 1963-2010 period, by using a production function approach. In contrast to early studies, which have analyzed the impact of a single dimension of knowledge on economic growth, a knowledge index is constructed to see the impact of various dimensions of knowledge with a single and comprehensive measure of the “level” of knowledge in the economy. Moreover, time series methods -such as cointegration and impulse response analysis- are used to analyze the role of knowledge on economic growth in Turkey. The empirical results indicate that higher level of knowledge had a positive impact on the growth rate of Turkish economy over the sample period. It is, therefore, necessary to create an economic environment that is conducive to enhance the level of knowledge and hence economic growth in Turkey.
    Keywords: Knowledge, Economic Growth, Turkey
    Date: 2012–09
  2. By: Nora Stel (Research Fellow at Maastricht School of Management and PhD Candidate at the Centre for Conflict Studies, Utrecht University _ /
    Abstract: The international community increasingly accepts that peace, security and development are decisively shaped by ‘good’ governance and institutions (World Bank (WB) 2011; Organization for Economic Co-operation and Development (OECD) 2008). This observation is only reinforced by current developments in the Middle East and North Africa (MENA) presented as the Arab Spring.2 Dynamics in Tunisia, Egypt, Libya, Yemen and Syria have nothing so much in common as their mix of socio-economic dilapidation and politicalinstitutional despondency. Corrupt, unrepresentative and increasingly ineffective state institutions have provided much of the seeds for the current developments. Yet, there is a pivotal aspect of governance that has been under-represented in the analysis of and response to the Arab Spring. This is the deceptiveness of the equation of governance with government. Analysts and policy-makers have construed the Spring as the bankruptcy of authoritarian government, but overlook the significance of the revolutions as an indication of resilient non-state governance. This disqualifies opportunities to build on existing and emerging non-state or semi-state governance arrangements. The aim of this paper is to offer an alternative frame for engaging with the Arab Spring. With reference to Lebanon, a country on the brink of being sucked into the upheavals, I propose that studies of the Spring would benefit from focusing on ‘twilight institutions’ and ‘mediated stateness’ in ‘hybrid political orders’ rather than on ‘fragile governments’ in ‘failing states.’ As a sensitizing exercise, the paper does not seek to present a detailed empirical analysis. The paper consists of four sections. Section 2 discusses the state-centered discourse that dominates analyses of the Arab Spring. In section 3, I juxtapose this state-centered perspective with a governance-oriented view on the Spring that is explicated in section 4 with illustrations from Lebanon. Section 5 concludes and offers a research agenda.
    Date: 2013–05
  3. By: Selen Baser; Hande Kucuk; Fethi Ogunc
    Abstract: [EN] We provide Bayesian estimates of the hybrid New Keynesian Phillips Curve (NKPC) to explain the dynamics of the consumer price inflation in Turkey, focusing particularly on the domestic component of the real marginal cost. We find that the baseline model which uses current and lagged values of the output gap as a measure of the domestic real marginal cost does a better job at accounting for the consumer price inflation in Turkey compared to alternative models which incorporate the unit labor cost. On the other hand, estimations of the hybrid NKPC for the services inflation point to the importance of the unit labor cost for the inflation dynamics in this sector. [TR] Bu calismada Bayesci yontemler kullanilarak Turkiye icin Yeni Keynesci Phillips Egrisi (NKPC) tahminleri elde edilmekte ; ozellikle yurt ici kaynakli maliyet baskilarinin enflasyon uzerindeki etkileri uzerinde durulmaktadir. Yurt ici reel marjinal maliyet olcutu olarak cikti acigini kullanan baz modelin, reel birim ucret serilerini iceren alternatif modellere gore TUFE enflasyonunu aciklamakta daha basarili oldugu bulunmustur. Diger taraftan, hizmet enflasyonu icin yapilan NKPC tahminleri, reel birim ucretlerin bu sektordeki enflasyon dinamikleri uzerinde onemli rol oynadigini gostermektedir.
    Date: 2013
  4. By: Cebeci, Tolga; Fernandes, Ana M.
    Abstract: This paper examines the microeconomics behind the dramatic export boom experienced by Turkey during the 2000s. Using disaggregated customs data covering the universe of export transactions for Turkey during the period 2002-2011, it characterizes firm-level dynamics in the export sector and decomposes export growth at the aggregate, sector, and destination market levels to identify the role of firm turnover, destination turnover, and product turnover. The paper shows that in the short-run, aggregate export growth is dominated by growth in continuous exporters, and for these, growth is dominated by exports to their continued destinations and of their continued products. However, the observed high degree of churning across firms, destinations, and products accounts in the long run for a substantial part of Turkey's export growth. The patterns of micro-dynamics of export growth are verified across sectors and across groups of destination markets with some exceptions regarding exports to new emerging markets where net entry by Turkish-based exporters plays a more critical role for long-run growth.
    Keywords: Debt Markets,Export Competitiveness,Free Trade,Currencies and Exchange Rates,Economic Theory&Research
    Date: 2013–05–01
  5. By: Tumen, Semih
    Abstract: This paper presents a nonparametric analysis of the impact of the 2008 crisis on earnings distribution in Turkey. Using micro-level data from the Household Labor Force Survey (2004-2011), I show that the crisis has operated most visibly above the upper quartile of the earnings distribution. I present three main findings: (1) the share of the top decile -- especially the top percentile -- has increased significantly right after the crisis, (2) the top quartile (i.e., the right tail) of labor incomes in Turkey resembles, on average, a Pareto distribution with a corresponding Gini coefficient of around 0.23, and (3) following the crisis, the earnings differentials have widened above the top quartile and wildly deviated from the Pareto form. I document that the changes observed right after the crisis have mostly been temporary; that is, a normalization process has operated in the aftermath of the crisis. I argue that the health of the domestic banking system might be an important determinant of the effect of large scale financial crises on top labor incomes. A sound banking system can generate income polarization in a country, when global crises lead to asymmetric income reallocations across sectors.
    Keywords: Earnings differentials; inequality; the 2008 crisis; Turkish Household Labor Force Survey.
    JEL: C14 D33 J31
    Date: 2013–05–21
  6. By: Ufuk Demiroglu; Cagri Sarikaya
    Abstract: [EN] With the rapid recovery from the 2009 crisis, major indicators such as GDP and industrial production returned to their pre-crisis trends. This appears inconsistent with the picture obtained from the capacity utilization rate (CUR). The CUR had been relatively flat in the years before the 2009 crisis at a level considered to be consistent with stable inflation, and fell sharply when the crisis hit. Then it recovered significantly but not fully. The CUR is still substantially below its above-mentioned level that prevailed in pre-crisis years. The lack of a full recovery in the CUR to its pre-crisis trend despite the successful recovery in other variables might raise questions about the reliability of the CUR as a measure of excess capacity, and about the conclusion that the economy might be producing below its potential. This note argues that the CUR has not recovered fully because of the strength of investment (especially of machinery and equipment investment) over the past decade. The high level of investment resulted in above-trend growth in capacity. When the effect of that additional growth in capacity is removed from the CUR, the emerging picture is consistent with the one obtained from the other indicators. [TR] GSYH ve sanayi uretimi gibi ana gostergeler 2009 krizi sonrasinda iktisadi faaliyetin oldukca hizli bir sekilde toparlanarak uzun donem egilimine geri dondugune isaret etmektedir. Kapasite kullanim orani (KKO) ise bu resimle uyumsuz bir gorunum sergilemektedir. Kriz oncesi yillarda dengeli olarak degerlendirilebilecek bir seviyede yatay bir seyir izleyen KKO, 2009 krizinde hizla dusmus, ardindan buyuk olcude toparlanmakla birlikte kriz oncesi yillarda hakim olan seviyesine ulasamamistir ve anilan seviyenin belirgin sekilde altinda seyretmektedir. Diger gostergeler toparlanmaya isaret ederken KKO’nun tumuyle toparlanmamis olmasi, KKO’dan gelen atil kapasite mesajinin guvenilirligi konusunda soru isaretlerine yol acabilir. Bu calismada anilan uyumsuzluk yatirimlarin guclu seyretmis olmasina baglanmaktadir. Gerek kriz sonrasindaki toparlanma doneminde gerekse kriz oncesi yillarda yatirimlarin (ozellikle makine techizat yatirimlarinin) guclu olmasi sonucu, uretim kapasitesindeki artis uretimdeki artistan daha hizli olmus, bu durum kapasite kullanim oranini dusuk tutmustur. Soz konusu yatirim etkisi cikarildiginda KKO’nun sundugu resim diger gostergelerle uyumludur.
    Date: 2013
  7. By: Akçomakn Semih (TEKPOL, Middle East Technical University, and UNU-MERIT); Akdeve, Erdal (School of Management, Yıldırım Beyazıt University); Findik, Derya (TEKPOL, Middle East Technical University)
    Abstract: This paper provides a novel taxonomy of firms based on specialization versus diversification in production and markets. Firms may choose to specialize on few production activities or alternatively may build expertise in many activities. There is an accompanying decision when firms sell their products: whether to serve few or many markets. We argue that the location on the specialization-diversification spectrum significantly affects how firms manage innovation. For a sample of 90 innovator ICT firms in Ankara we find that cooperation structure, sources of innovation and funding of R&D display statistically significant different patterns according to the specialization-diversification taxonomy.
    Keywords: management of innovation, core competency, expertise building, R&D, ICT
    JEL: O32 L22 L86
    Date: 2013
  8. By: Schilirò, Daniele
    Abstract: This contribution examines the major features of UAE’s economy, its factors of strengths, undelying also its critical aspects. Furthermore, the work focuses on the crucial factors that characterize a diversified knowledge economy and indicates the policies that the economy of the United Arab Emirates must pursue in order to improve its performance and be a competitive economy at a global level. In addition, the paper tries to single out the new business sectors for the diversification and the development of the UAE’s economy.
    Keywords: diversification; knowledge economy; institutions; innovation; development
    JEL: D83 J20 O11 O14 O31 O33 O38
    Date: 2013–05
  9. By: Abdel-Hameed Nawar (Faculty of Economics and Political Science, Cairo University)
    Abstract: This paper examines the substantive pros and cons of the multidimensional poverty index (MPI) recently developed by Oxford University?s Poverty and Human Development Initiative (OPHI). It provides comparative cross-country and country-specific discussion on multidimensional poverty and inequality in the non-income space, with a special reference to the countries in the Arab region. Despite the large degree of subjectivity in selecting the dimensions and the cut-off threshold (k=3) determining the minimum number of dimensions required to identify whether or not a household is multidimensionally poor, the MPI has an important advantage of capturing more dimensions of human deprivations and includes both the level of human deprivation and a measure of the intensity of poverty using micro survey data. (?)
    Keywords: Poverty and Inequality in the Non-income Multidimensional Space: a Critical Review in the Arab States
    Date: 2013–03
  10. By: Afsin Sahin (Department of Banking, Gazi University); Aysit Tansel (Department of Economics, METU); M.Hakan Berument (Department of Economics, Bilkent University)
    Abstract: This paper investigates the nature of the output-employment relationship by using the Turkish quarterly data for the period from 1988 to 2008. Even if we fail to find a long-run relationship between aggregate output and total employment, there are long-run relationships for the aggregate output with non-agricultural employment and sectoral employment levels for seven of nine sectors that we consider. However, a further investigation for the output and employment relationship within a short-run perspective do not reveal statistically significant relationships for either total employment, or non-agriculture employment or the eight out of the nine sectors that we consider. Thus, it seems that sustainable growth is an essential economic agenda for employment generation concerning the sectors and that there is a long-run link but weak short run link with demand.
    Keywords: Output, Employment, Seasonal Cointegration
    JEL: C32 E24 E32
    Date: 2013–05
  11. By: Gerau, Jasmin
    Abstract: The European Union has presented itself as a leading actor in global environmental politics, exporting its values and rules not only into global environmental agreements but also promoting these in their relations with the neighbouring countries to the southern Mediterranean. Academic attention for the promotion and exportation of the EU model has been high and two central debates have emerged, the EU as a normative power and EU external governance which are, as the paper argues, based on the common notion of the EU exporting its model and therefore complementary. While many empirical studies on the concepts exist, the paper argues that an external perspective has been largely disregarded. The paper will therefore give an empirical assessment on how the notion of EU exporting its values and rules is perceived by the recipient country of Jordan.
    Keywords: Environmental policy; EU external governance; Normative Power Europe
    Date: 2012
  12. By: André De Palma (Département d'Économie et de Gestion, École Normale Supérieure Cachan); Federico Perali (Department of Economics (University of Verona)); Nathalie Picard (Théorie Économique, Modélisation, Application (THEMA), Université de Cergy-Pontoise); Roberto Ricciuti (Department of Economics (University of Verona)); Alexandrina Ioana Scorbureanu (Department of Economics (University of Verona))
    Abstract: This study presents a novel approach to crisis prevention based on data on premonitory political and religious events and the international media coverage of publicly sensitive circumstances. We implement our method to the Israel-Palestine conflict. First we identify two main political scenarios associated with “good” and “bad” political times of low or high levels of political unrest using a hierarchical clustering technique. Then we construct a political alert index to predict the probability of occurrence of good and bad times. Bad times are positively and significantly associated with the number of Israeli victims at the checkpoints, the number of homeless or injured Palestinians and with the number of demolitions. The number of Palestinian prisoners and injured Israelis negatively affect the probability of occurrence of a bad time. Media coverage is positively and significantly associated with the transition to bad times. Our results show that our statistical tool can be a reliable method for early warning of social crisis and can be effectively replicated to other social crisis situations.
    Keywords: Crisis prevention, alert index, news, Israel, Palestine
    JEL: D74 F51 P48
    Date: 2013–05

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