nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2014‒04‒11
fourteen papers chosen by
Paul Makdissi
University of Ottawa

  1. Investigating the Role of Extensive Margin, Intensive Margin, Price and Quantity Components on Turkey’s Export Growth during 1998-2011 By Kemal Türkcan
  2. Impact of Internal Migration On Political Participation in Turkey By Ali T. Akarca; Aysýt Tansel
  3. The kitchen furniture market in the Middle East and North Africa By Aurelio Volpe; Mauro Spinelli
  4. Regional Economic Activity in Turkey: A New Economic Geography Approach By Mehmet Burak Turgut
  5. Returns to Foreign Language Skills in a Developing Country: The Case of Turkey By Antonio Di Paolo; Aysýt Tansel
  6. Inflation Targeting and Inflation Expectations: Evidence for Brazil and Turkey By Sumru Altug; Cem Cakmakli
  7. The Impact of Oil Revenues on the Iranian Economy and the Gulf States By Dreger, Christian; Rahmani, Teymur
  8. Macroeconomic and fiscal challenges faced by the Southern and Eastern Mediterranean region By Marek Dabrowski
  9. Imported intermediate inputs and Egyptian exports: Exploring the links By María D. Parra; Inmaculada Martínez-Zarzoso
  10. The Impact of Vocational Training for the Unemployed: Experimental Evidence from Turkey By Hirshleifer, Sarojini; McKenzie, David; Almeida, Rita K.; Ridao-Cano, Cristobal
  11. Shaky emerging economies in view of the global financial crisis : the Turkish economy after three decades of liberal reforms By Faruk Ülgen
  12. Institutional Environments and the internationalization of franchise chains: the contrasting cases of North African countries By Odile CHANUT; Nadjoua GHARBI; Dominique BONET FERNANDEZ
  13. Do natural disasters beget fraud victimization?: Unrealized coping through labor migration among the poor By Yoshito Takasaki
  14. Cyclical components and dual long memory in the foreign exchange rate dynamics: the Tunisian case By Rania Jammazi; Chaker Aloui

  1. By: Kemal Türkcan (Akdeniz University)
    Abstract: Purpose: Recent empirical research in international trade emphasizes the role of the extensive and intensive margin to the export growth. This paper examines the sources of export growth in Turkey. For this purpose, the study decomposes Turkey’s export growth into extensive and intensive margins by using two methodologies, the count method and the decomposition method of export growth shares. The intensive margin into price and quantity components is further decomposed in order to evaluate the role of changes in price and changes in quantity. Detailed bilateral trade data, BACI, from CEPII are employed to analyze Turkey’s export statistics with 209 countries at the HS-6 level over the period 1998–2011. Additionally, these methods are employed for different categories of goods (final goods and intermediate goods exports). The results suggest that the extensive margin, particularly geographic diversification, plays the most important role in Turkey’s total goods export growth. Further, the growth in Turkey’s total goods exports is mainly explained by quantity rather than price growth. The results further point out that growth in Turkey’s final goods was driven by price growth, whereas growth in intermediate goods exports was mainly explained by quantity growth. Yet the results also suggested that product and geographic diversification of Turkey’s have not been fully realized and thus many more opportunities exist for Turkey to expand product range or expand into new markets, which in turn will bring significant benefits in the form of stable, sustainable economic growth.
    Keywords: Turkey, export margins
    Date: 2014
  2. By: Ali T. Akarca (University of Illinois at Chicago); Aysýt Tansel (Middle East Technical University)
    Abstract: During last sixty years, Turkish population moved from one province to another at the rate of about 7-8 percent per five-year interval. As a consequence of this massive internal migration, population residing in a province other than the one they were born in increased from 12 percent in 1950 to 39 percent in 2011. Impact of this population instability on provincial turnout rates in 2011 parliamentary election is studied, controlling for the effects of other socio-economic, demographic, political and institutional factors. Consequences of migration both at destinations and origins are considered. According to robust regressions estimated, the relationship between turnout and education is inverse U-shaped, and between turnout and age, U-shaped. The latter reflects generational differences as well. Large population, large number parliament members to be elected from a constituency, participation by large number of parties, and existence of a dominant party depress the turnout rate. A percentage increase in the proportion of emigrants among the people born in a province reduces turnout rate in that province by 0.13 percentage points, while a percentage increase in the ratio of immigrants in the population of a province reduces it by 0.06 percentage points. However, at destinations where large numbers of immigrants from different regions are concentrated, the opportunity afforded to immigrants to elect one of their own, reduces the latter adverse impact significantly and in some cases turns it to positive.
    Keywords: Election turnout, internal migration, political participation, Turkey, voter behavior.
    Date: 2014
  3. By: Aurelio Volpe (CSIL Centre for Industrial Studies); Mauro Spinelli (CSIL Centre for Industrial Studies)
    Abstract: The Report 'The kitchen furniture market in Middle East and North Africa (MENA)' analyses supply structure, distribution system (channels), market demand, import-export flows, competitive system, providing statistical data and trends of kitchen furniture production and consumption, as well as import and export data. 2015 forecasts on number of kitchen sold is given for each country considered (Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, United Arab Emirates).
    JEL: L11 L22 L68 L81
    Date: 2013–11
  4. By: Mehmet Burak Turgut (University of Warsaw)
    Abstract: This paper studies the spatial economic activity in Turkey and estimates the correlation between wages and consumer demand across NUTS1 regions of Turkey. First, I estimate simple market potential function to test whether closeness to larger markets has impact on wages. Second, I estimate Krugman (1993) economic geography model to see the agglomeration forces in Turkey. The results suggest that wages are higher in the regions close to larger markets and low trade costs and high share of expenditure on manufactured goods are the forces of agglomeration in Turkey.
    Keywords: Regional economic activity, Turkey, economic geography model
    Date: 2014
  5. By: Antonio Di Paolo (University of Barcelona); Aysýt Tansel (Middle East Technical University)
    Abstract: Foreign language skills represent a form of human capital that can be rewarded in the labor market. Drawing on data from the Adult Education Survey of 2007, this is the first study estimating returns to foreign language skills in Turkey. We contribute to the literature on the economic value of language knowledge, with a special focus on a country characterized by fast economic and social development. Although English is the most widely spoken foreign language in Turkey, we initially consider the economic value of different foreign languages among the employed males aged 25 to 65. We find positive and significant returns to proficiency in English and Russian, which increase with the level of competence. Knowledge of French and German also appears to be positively rewarded in the Turkish labor market, although their economic value seems mostly linked to an increased likelihood to hold specific occupations rather than increased earnings within occupations. Focusing on English, we also explore the heterogeneity in returns to different levels of proficiency by frequency of English use at work, birth-cohort, education, occupation and rural/urban location. The results are also robust to the endogenous specification of English language skills.
    Date: 2013
  6. By: Sumru Altug (Department of Economics, Koc University, CEPR); Cem Cakmakli (Department of Economics, Koc University, Department of Quantitative Economics, University of Amsterdam)
    Abstract: In this paper, we study the evolution of inflation expectations for two key emerging economies, Brazil and Turkey, using a reduced form model in a state-space framework, where the level of inflation is modeled explicitly. We match the survey-based inflation expectations and inflation targets set by the central banks of Brazil and Turkey with the predictions implied by the model in a statistically coherent way. Confronting these expectations with inflation targets leads to a statistical measure of the discrepancy between inflation expectations and the target inflation. The results indicate that inflation expectations are anchored more closely the inflation target set by the Central Bank for Brazil. By contrast, there is more evidence that inflation expectations deviate significantly from the target inflation set by the Central Bank for Turkey.
    Keywords: Inflation targeting, survey-based inflation expectations, forecasting, state space model.
    JEL: E31 E37 C32 C51
    Date: 2014–04
  7. By: Dreger, Christian (DIW Berlin); Rahmani, Teymur (University of Tehran)
    Abstract: In line with the neoclassical growth model a persistent stream of oil revenues might have a long lasting impact on GDP per capita in oil exporting countries through higher investment activities. This relationship is explored for Iran and the countries of the Gulf Cooperation Council (GCC) using (panel) cointegration techniques. The existence of cointegration between oil revenues, GDP and investment can be confirmed for all countries. While the cointegration vector is found to be unique for Iran, long run equations for GDP and investment per capita are distinguished for the Gulf countries. Both variables respond to deviations from the steady state, while oil income can be treated as weakly exogenous. The long run oil elasticities for the Gulf states exceed their Iranian counterparts. In addition, investment in Iran does not react to oil revenues in the long run. Hence, oil revenues may have been spent less wisely in Iran over the past decades.
    Keywords: oil exporting countries, oil revenues, panel cointegration
    JEL: F43 O53 Q30 C33
    Date: 2014–03
  8. By: Marek Dabrowski
    Abstract: The current fiscal imbalances and fragilities in the Southern and Eastern Mediterranean countries (SEMC) are the result of decades of instability, but have become more visible since 2008, when a combination of adverse economic and political shocks (the global and European financial crises, Arab Spring) hit the region. In an environment of slower growth and higher public expenditure pressures, fiscal deficits and public debts have increased rapidly. This has led to the deterioration of current accounts, a depletion of official reserves, the depreciation of some currencies and higher inflationary pressure. To avoid the danger of public debt and a balance-of-payment crisis, comprehensive economic reforms, including fiscal adjustment, are urgently needed. These reforms should involve eliminating energy and food subsidies and replacing them with targeted social assistance, reducing the oversized public administration and privatizing public sector enterprises, improving the business climate, increasing trade and investment openness, and sector diversification. The SEMC may also benefit from a peace dividend if the numerous internal and regional conflicts are resolved. However, the success of economic reforms will depend on the results of the political transition, i.e., the ability to build stable democratic regimes which can resist populist temptations and rally political support for more rational economic policies.
    Keywords: Southern and Eastern Mediterranean, fiscal policy, macroeconomic policy, energy and food subsidies, Arab Spring, Arab transition
    JEL: E62 E63 H24 H56 H62 H63
    Date: 2014–04
  9. By: María D. Parra (Department of Economics, Universitat Jaume I, Castellón, Spain); Inmaculada Martínez-Zarzoso (Instituto de Economía Internacional, Universidad Jaume I, Castellón, Spain and Department of Economics, Georg-August Universitaet Goettingen, Göttingen, German)
    Abstract: This paper aims at exploring the links between firms’ exporting and importing activities in Egyptian firms. With this aim, a panel dataset of 554 Egyptian manufacturing firms that contains yearly data over the period from 2003 to 2007 is used to estimate the probability of exporting /importing. According to the related literature a complementarity gain is generated when firms are involved in both activities because then they are able to internalize the common fixed costs to access a given foreign market (e.g. Kashara and Lapham, 2013). Stylized facts indicate that firms that start exporting or importing are more likely to become two-traders. The purpose of our research is to better understand this relationship in Egypt, which is the most populated and economically influential country in the Middle East. The main results show a high degree of hysteresis on past international activity, where past experience still most important to determine the continuance in the same activity and we achieve that Egyptian firm’s face to higher sunk cost of imported intermediates than sunk cost faced to sell their products in foreign markets.
    Keywords: imported intermediates, exporting activity, internationalization, Egypt
    JEL: F10
    Date: 2014
  10. By: Hirshleifer, Sarojini (University of California, San Diego); McKenzie, David (World Bank); Almeida, Rita K. (World Bank); Ridao-Cano, Cristobal (World Bank)
    Abstract: We use a randomized experiment to evaluate a large-scale active labor market policy: Turkey's vocational training programs for the unemployed. A detailed follow-up survey of a large sample with low attrition enables precise estimation of treatment impacts and their heterogeneity. The average impact of training on employment is positive, but close to zero and statistically insignificant, which is much lower than either program officials or applicants expected. Over the first year after training we do find training to have had statistically significant effects on the quality of employment, and that the positive impacts are stronger when training is offered by private providers. However, longer-term administrative data shows that after three years these effects have also dissipated.
    Keywords: vocational training, active labor market programs, randomized experiment, private provision
    JEL: I28 J24 J68 O12 C93
    Date: 2014–03
  11. By: Faruk Ülgen (CREG - Centre de recherche en économie de Grenoble - Université Pierre-Mendès-France - Grenoble II : EA4625)
    Abstract: In the wake of the global change of a new accumulation regime in major capitalist economies, the opening up and liberalisation process of emerging economies from the 1980s has provoked great expectations that resulted in recurrent disappointing crises. Studied as a stylized fact, the Turkish experience leads us to assess the role of liberalised macroeconomic environment, unsuitable economic policies and hesitant and weak regulatory mechanisms as the main sources of perverse sequencing in the reform area. The paper shows that the Turkish crises since the 1980s arose from bad macroeconomic policies, which implemented the neo-liberal shock therapy model and triggered boom-and-bust cycles. After three decades of liberal reforms, the Turkish economy remains still subject to structural downturns. The economic recovery is not guaranteed by a hasty liberalisation. It requires consistent policies which should frame economic agents' forms of behaviour in order to induce a sustainable macroeconomic development.
    Keywords: liberalisation ; stability ; sustainable growth regime ; Turkish economy
    Date: 2013–10–28
  12. By: Odile CHANUT; Nadjoua GHARBI; Dominique BONET FERNANDEZ
    Abstract: Franchising has become a dominant model of retailing in the Western world and is also developing in emerging countries, with the internationalization of franchisors. The paper is an attempt at explaining the significant differences in the development of franchise between Morocco, Algeria and Tunisia. Explanations can be found in the general institutional environment in these countries (country risk, capital export control) as well as in the governments' willingness to modernize the distribution structures and the specific institutional environment of franchising: franchising law, the development of federations that serve to legitimize franchise partners with resource providers, banks and prospective franchisees. The analytical framework is that of institutional theory (DiMaggio and Powell, 1983) that provides new insight on approaches based on economic efficiency (agency theory and the resource scarcity perspective). From an analysis of the documents in the major public databases in the three countries, supplemented with field research, we propose an analysis grid of the institutional environment specific to franchising. Our analysis grid is used to explain the contrasting development of franchises in the North African countries. This development is also explained through the institutional theories renewing the approaches based on economic efficiency (agency theory and the resource scarcity perspective).
    Keywords: Institutional environment, institutional theory, analysis grid, international expansion, Maghreb.
    Date: 2014–03–28
  13. By: Yoshito Takasaki
    Abstract: Although international remittances are important insurance against natural disasters in developing countries, fraud is a pitfall of international labor migration. This paper addresses an unexplored question about the disaster-fraud nexus: Do natural disasters beget fraud victimization among the poor as they seek labor migration for coping? I exploit a natural experiment: Two years after a cyclone, a huge number of Fijian males were defrauded of application fees for labor migration to the Middle East in 2005. My household survey data, which by chance I collected before the fraudulence was noticed, are free from underreporting/misreporting out of embarrassment. Controlling for the endogeneity of household housing damage reveals that housing damage strongly increases individual memberfs job application that later turned out to be fraud victimization. Households resort to high-risk, highreturn labor migration because their domestic coping options are constrained by their labor endowment.
    Date: 2013–07
  14. By: Rania Jammazi; Chaker Aloui
    Abstract: The purpose of this paper is to question the traditional conventional view on the exchange rate targeting that real shocks have
    Keywords: exchange rates; time series decomposition; HML test; dual long memory.
    JEL: E30 F31
    Date: 2014–03–28

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