nep-ara New Economics Papers
on Arab World
Issue of 2013‒09‒06
four papers chosen by
Paul Makdissi
University of Ottawa

  1. Trade-offs in water policy: System-wide implications of changing water availability and agricultural productivity in the Mediterranean economies by 2050 By Roberto Roson; Martina Sartori
  2. Making Sense of Arab Labor Markets: The Enduring Legacy of Dualism By Assaad, Ragui
  3. Does Government Support for Private Innovation Matter? Firm-Level Evidence from Turkey and Poland By Wojciech Grabowski; Teoman Pamukcu; Krzysztof Szczygielski; Sinan Tandogan
  4. "For the love or the Republic" Education, Secularism, and Empowerment By Selim Gulesci; Erik Meyersson

  1. By: Roberto Roson (Department of Economics, University Of Venice Cà Foscari); Martina Sartori (Scuola di Studi Internazionali, University of Trento)
    Abstract: We evaluate the structural consequences of water availability scenarios in the Mediterranean, following a multidisciplinary approach and a sequential modelling methodology. This includes an assessment of future water availability and a general equilibrium macroeconomic analysis of changes in agricultural productivity. Lower productivity in agriculture, induced by reduced water availability, generates negative consequences in terms of real income and welfare. The magnitude of the loss depends on the amount of the productivity shock, but also on the share of agricultural activities in the economy and on the stringency of the environmental regulation. We find evidence of a dramatic cut in the supply of water for agriculture in the Middle East. We consider alternative scenarios, differing in terms of stringency of environmental regulation and assumptions about water efficiency. The largest welfare losses turn out to be in Morocco and Tunisia, in the “worst” scenario NM. Other very relevant impacts can be observed in Turkey, Italy and Rest of Middle East and North Africa (XMENA). There are also clear differences among the scenarios. First, applying a constraint on access to environmental water reserves only for Europe does make a big difference for non-European countries (Morocco, Tunisia and XMENA), implying that governments in the Middle-East could respond to increasing water scarcity by accepting, to some extent, lower environmental quality (deterioration of aquatic environments). Second, improvements in water efficiency, as envisaged in the simulation exercise, appear to curb the economic impact of water scarcity quite significantly. This is especially true for countries in the North, whereas efficiency does not compensate for a strict environmental policy in the South.
    Keywords: Climate change, water use, agriculture, General Equilibrium Models, Mediterranean.
    JEL: C68 Q15 Q25 Q56
  2. By: Assaad, Ragui (University of Minnesota)
    Abstract: It is well-established that Arab labor markets share certain common characteristics, including an oversized public sector, high unemployment for educated youth, weak private sector dependent on government welfare for their survival, rapid growth in educational attainment, but much of it focused on the pursuit of formal credentials rather than productive skills, and low and stagnant female labor force participation rates. I argue in this paper that all of these features can be explained by the deep and persistent dualism that characterizes Arab labor markets as a result of the use of labor markets by Arab regimes as tool of political appeasement in the context of the "authoritarian bargain" social contract that they have struck with their citizens in the post-independence period. Even as fiscal crises have long destabilized these arrangements in most non-oil Arab countries, culminating in the dramatic political upheavals of the Arab spring revolutions, the enduring legacy of dualism will continue to strongly shape the production and deployment of human capital in Arab economies for some time. This will undoubtedly pose serious challenges to any efforts to transform these economies into dynamic, rapidly growing and more equitable globally competitive economies.
    Keywords: labor market dualism, Arab Spring, unemployment, education, authoritarian bargain
    JEL: I25 J21 J24 J31 J45 O53 P52
    Date: 2013–08
  3. By: Wojciech Grabowski; Teoman Pamukcu; Krzysztof Szczygielski; Sinan Tandogan
    Abstract: The aim of the project is to analyze government support for innovation in a comparative perspective by first examining the main existing instruments of financial support for innovation in Turkey and Poland, and secondly to assess their effectiveness by applying recent econometric techniques to firm-level data for both countries obtained from the Community Innovation Survey (CIS). Comparing Turkey to Poland is both meaningful and promising from a policy-analysis point of view. Both countries are comparable in terms of levels of economic development and technological capabilities, i.e. the ability of their economies to create knowledge and exploit it commercially. Both have undergone deep market-oriented reforms in the last decades – Turkey since 1980, Poland since 1989 – resulting in a significant catching-up of their economies. However, as the possibilities for further growth based on structural change and eliminating obstacles to business are shrinking, the problem of building a knowledge-based economy comes to the fore. In Turkey, one can observe the growing popularity and the generous practices of public incentives in industrial R&D and innovation, in addition to the recent trends in public policies to support technological entrepreneurship and the commercialization of research output. Since 2004, significant changes and improvements have taken place in Turkey concerning science and technology policy schemes that have actually influenced the national innovation system in a number of ways. These include: an important increase in public support provided to private R&D, the diversification of direct support programmes for private R&D and innovation (which was tailored to the needs of potential innovators), a widening of the scope of existing fiscal incentives for private R&D activities and the implementation of new ones, the implementation of new call-based grant programmes targeted at technology areas and industries based on national priorities. Considering the large resource allocation for the government involvement, there is a growing and urgent need for the systematic monitoring and evaluation of R&D and innovation policies in Turkey. In Poland, the science, technology and innovation (STI) policies were seen as less important than other reforms (financial system, privatization, pensions etc.) during the economic transition. The STI policies have lacked funding, co-ordination and vision. The institutional Architecture has evolved with a lack of continuity and a short institutional memory. A major breakthrough occurred after 2004 when considerable funds for innovation were provided via EU structural funds. The three principle areas of support were the creation of technologies, technology absorption and indirect support. However, with respect to public programmes targeting firms, technology absorption has dominated all other instruments. Consequently, it is legitimate to ask whether the EU funds are being spent in the best possible way, and in particular, whether they contribute to the enhanced innovation performance of economy. To assess the efficiency of public support, the same econometric methodology is applied to the Turkish and Polish 2008 and 2010 editions of the Community Innovation Survey for manufacturing firms. Two models are estimated: one following the now classical CDM model and assessing the role of innovation spending, but assuming government support to be exogenous, and another controlling for the endogeneity of support but assuming a simplified version of the innovation performance equation. Depending on data availability, extensions of the analysis for both countries are offered: for Turkey the estimation of a full-fledged CDM model and for Poland the analysis of panel data for 2006-2010 and an assessment of the Efficiency of specific kinds of public support. The evidence indicates that government support contributes to higher innovation spending by firms and this in turn improves their chances to introduce product innovations. The positive impact remains valid even when a possibly non-random selection of firms for government support programmes is controlled for. The extended analysis of Turkey has proved that there is a positive relationship between innovation and firm productivity. On the other hand, substantial differences between various kinds of public aid were identified. In particular, support from local government proved inefficient or less efficient than the support from central government or the European Union. Moreover, in Poland, grants for investment in new machinery and equipment and human resources upgrading proved to contribute significantly less to innovation performance than support for R&D activities in firms. In terms of policy recommendations, this report supports an increase in the volume of innovation support and in the number of instruments used in Turkey. However, a more specific analysis is needed to explain the inefficiency of support from local government. The recommendation for Poland is to redesign the innovation support schemes for firms so as to put more focus on R&D activities and the development of truly new products and technologies
    Keywords: Innovation, Manufacturing Firms, Government Support, EU Structural Policy, Poland, Turkey
    JEL: O31 O38 H81
    Date: 2013–08
  4. By: Selim Gulesci; Erik Meyersson
    Abstract: We exploit a change in compulsory schooling laws in Turkey to estimate the causal effects of education on religiosity and women's socio-economic status. A new law, implemented in 1998 bound individuals born after a specific date to 8 years of schooling while those born earlier could drop out after 5 years. This allows the implementation of a Regression Discontinuity (RD) Design and the estimation of meaningful causal estimates of schooling. Using the 2008 Turkish Demographic Health Survey, we show that the reform resulted in a one-year increase in years of schooling among women on average, although it did not increase schooling among men. Over a period of ten years, this education increase resulted in women having lower religiosity, greater decision rights over marriage and fertility, and higher household wealth. We find that a muted average RD effect on labor force participation shrouds heterogenous effects depending on socioeconomic background; women from more socially conservative backgrounds tend to obser ve no increase in labor force participation whereas women from less conservative backgrounds experience a large increase. Education thus empowers women across a wide spectrum of a Muslim society, yet faces limits in allowing women in the conservative communities from realizing their full potential through the labor market. JEL Classification: J16, I25, Z12
    Date: 2013

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