nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2014‒11‒22
ten papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Uncertainty and Volatility in MENA Stock Markets During the Arab Spring By Al Shugaa, Ameen; Masih, Mansur
  2. The EU-Turkey Energy Relations After the 2014 Ukraine Crisis. Enhancing The Partnership in a Rapidly Changing Environment By Simone Tagliapietra
  3. Labor Law Reforms and Labor Market Performance in Egypt By Ahmed Fayez Abdelgouad
  4. Models of Green Economy in Arab Countries Using the Environmental Performance Index By Driouchi, Ahmed; El Alouani, Hajar
  5. Testing of Natural Resources as Blessing or Curse to the Knowledge Economy in Arab Countries By Driouchi, Ahmed
  6. Parental influence on female vocational decisions in the Arabian Gulf By Rutledge, Emilie; Madi, Mohamed; Forstenlechner, Ingo
  7. Effects of Political Turmoil (Arab Spring) on Portfolio Diversification Benefits: Perspectives of the Moroccan Islamic Stock investors By Rahim, Adam Mohamed; Masih, Mansur
  8. Decomposition of welfare distribution in Iran By Mazyaki, Ali; Davodi, Pedram
  9. Saudi Arabia: 2014 Article IV Consultation-Staff Report; Press Release By International Monetary Fund. Middle East and Central Asia Dept.
  10. Reel Doviz Kuru ve Turkiye Dis Ticaret Dinamikleri By Erdal Ozmen

  1. By: Al Shugaa, Ameen; Masih, Mansur
    Abstract: This paper sheds light on the economic impacts of political uncertainty caused by the civil uprisings that swept across the Arab World and have been collectively known as the Arab Spring. Measuring documented effects of political uncertainty on regional stock market indices, we examine the impact of the Arab Spring on the volatility of stock markets in eight countries in the Middle East and North Africa (MENA) region: Egypt, Lebanon, Jordon, United Arab Emirate, Qatar, Bahrain, Oman and Kuwait. This analysis also permits testing the existence of financial contagion among equity markets in the MENA region during the Arab Spring. To capture the time-varying and multi-horizon nature of the evidence of volatility and contagion in the eight MENA stock markets, we apply two robust methodologies on data from November 2008 to March 2014: MGARCH-DCC, Continuous Wavelet Transforms (CWT). Our results tend to indicate two key findings. First, the discrepancies between the volatile stock markets of countries directly impacted by the Arab Spring and the countries that were not directly impacted indicate that international investors may still enjoy portfolio diversification and investment in MENA markets. Second, the lack of financial contagion during the Arab Spring suggests that there is little evidence of cointegration among MENA markets implying the opportunities of portfolio diversification. Providing a general analysis of the economic situation and the investment climate in the MENA region during and after the Arab Spring, this study bears significant importance for the policy makers, local and international investors, and market regulators.
    Keywords: Portfolio Diversification, MENA Region, Stock Market Indices, MGARCH-DCC, Wavelet Analysis, CWT
    JEL: C22 C58 G11 G15
    Date: 2014–08–27
  2. By: Simone Tagliapietra (Fondazione Eni Enrico Mattei (FEEM))
    Abstract: Over the last two decades energy has emerged as an increasingly important component of the overall EU-Turkey relations. In particular, the Southern Gas Corridor (SGC) and its flagship project, Nabucco, soon became the pivotal element of the EU-Turkey energy relations. After years of strong cooperation, the failure of Nabucco and the emergence of TANAP have ultimately outlined a divergence in the way the EU and Turkey perceive not only the SGC but also their energy relations. This divergence represents a serious risk for the strategic interests of both the EU and Turkey, and for this reason there is a need to rethink the EU-Turkey energy relations. This need is now particularly urgent, as the market and political environment on which Nabucco was conceptualized is rapidly changing, potentially opening up new opportunities of energy cooperation for the EU and Turkey. On the supply side, new major gas reserves have been discovered in the Kurdistan Region of Iraq (KRI) and in offshore Israel, while on the demand side the unprecedented political standoff between the Western world and Russia resulted by the 2014 Ukraine crisis might reinvigorate the EU’s quest to diversify its gas supply portfolio. These developments can potentially converge to reshape the EU-Turkey energy relations. In fact, in this scenario the SGC could eventually gain a new momentum, with the gas reserves of the KRI and Israel as primary target. However, after the failure of Nabucco the unconditional support of Turkey should not be taken for granted by the EU, as the country might prefer to secure its own energy supply on a bilateral basis with gas producing countries. In order to avoid the risk of a further fragmentation of the SGC, a new “EU-Turkey Natural Gas Initiative” -such as the one proposed in this paper- seems to be urgently needed, for the benefit of both the EU and Turkey.
    Keywords: EU-Turkey Energy Relations, EU Energy Security, Southern Gas Corridor
    JEL: Q40 Q42 Q48
    Date: 2014–09
  3. By: Ahmed Fayez Abdelgouad (Leuphana University Lueneburg, Germany)
    Abstract: This study introduces a review of the institutional framework in the Egyptian labor market to show how it is regulated by discussing extensively the most recent labor law regulations in Egypt and the main reasons behind enacting this law. The paper guides also to different data sources that can be used and highlights a number of empirical studies about the labor market in Egypt. Finally, itconcludes that further reforms are still required to improve labor market efficiency in Egypt.
    Keywords: labor law, reforms, labor market flexibility, Egypt
    JEL: J31 J41 J51
    Date: 2014–10
  4. By: Driouchi, Ahmed; El Alouani, Hajar
    Abstract: Abstract This paper aims at characterizing the main trends affecting the environmental and greening economy systems in Arab countries. This is tackled through the use of data based on Environmental Performance Index (EPI) with statistical analysis of its related indicators. Promising results are attained based on descriptive statistics, trend and regression analyzes besides comparison of oil and non-oil exporting countries. The attained results show that Arab countries express different patterns with regard to environmental performance and greening of their economies while statistically significant differences appear between oil and non-oil exporters.
    Keywords: Keywords: green economy, environmental performance index, oil and non-oil exporting countries.
    JEL: O2 Q5
    Date: 2014–09–19
  5. By: Driouchi, Ahmed
    Abstract: Abstract This paper focuses on testing if natural resources constituted a blessing or a curse to the progress of knowledge economy in Arab countries. Some of these economies are based on natural resources and mainly oil and gas that are major sources of economic rents. The attained results from all the sample of Arab countries, show how knowledge variables are negatively related to the rents from natural resources. Natural resources appear thus as a curse to the expansion of knowledge economy in the overall set of countries. But, when taken country by country as in the literature, natural resources as blessing are shown over some economies. Transformation of curse to a sustainable blessings is the promising economic and social direction of change that could increase further inclusive growth in the Arab economies.
    Keywords: Keywords: Rents, natural resources, curse, blessing, sovereign funds, inclusion.
    JEL: O11 Q2 Q3
    Date: 2014–09–15
  6. By: Rutledge, Emilie; Madi, Mohamed; Forstenlechner, Ingo
    Abstract: Due to the Arabian Gulf’s pyramid-style ‘national’ demographic profile and pronounced reliance on expatriate labor, policymakers are now actively seeking ways to increase national FLFP. In this context, we examine the impact of parental influence on the post-graduation vocational intentions of women in the United Arab Emirates. Perceived levels of parental support, engagement and interference are measured against factors including: the likelihood per se of seeking formal employment, sectoral preferences and, the impact of sociocultural barriers on such decisions. While remunerative factors (particularly salary and maternity leave) and sentiment towards a given occupation’s ‘appropriateness’ were observed to have considerable bearing, so was the role played by parents. Parental support is found to significantly reduce the magnitude of sociocultural barriers. Conversely, parental interference results in labor market entry being less likely. Moreover, those whose fathers have tertiary-level education have a significantly higher intention of joining the workforce.
    Keywords: Arabian Gulf Labor Markets; Female Labor Force Participation; Parental Career-related Behavior, Vocational Behaviour, Middle East Human Resource Model
    JEL: J08 O10 O15 O53
    Date: 2014–06–13
  7. By: Rahim, Adam Mohamed; Masih, Mansur
    Abstract: This study makes the initial attempt to investigate the time varying volatility and return linkages of Moroccan Islamic stock indices with the market and regional based indices especially during times of political unrest. More specifically, we use the Dow Jones Islamic Developed markets and Emerging markets indices to represent the market based indices, whereas Dow Jones Islamic Europe and Dow Jones Islamic Asia Pacific were used to represent regional based indices. In an attempt to unravel the time-varying nature of these co-movements, the MGARCH-DCC which is one of the recent research methodologies was adopted and applied on daily data covering from June 2007 to December 2012. From the discovered results, it is seen that the Moroccan Islamic investors may derive benefits from portfolio diversification across stock markets of Developed markets and the Asia Pacific market especially during times when there is no political unrest. The findings obtained under this study are crucial for understanding the role of political uncertainty on the stability of the stock market and is of great interest to investors especially the Islamic ones.
    Keywords: Islamic stock indices, Arab Springs, Multivariate GARCH-DCC, Opportunities for portfolio diversification
    JEL: C22 C58 G11 G15
    Date: 2014–08–25
  8. By: Mazyaki, Ali; Davodi, Pedram
    Abstract: After Hamilton (2001) and Costa (2001) many empirical and analytical studies (Gong and Meng (2007), Barrett and Brzozowski (2008), …) have manipulated and extended Engel's law to estimate CPI bias and regional price differences. However, there is not yet any study on Iran in which the biases in spatial prices or price indices are discriminated. In this study we suggest that bidimensional social welfare perspectives may contribute very well to policy implications intending to protect Iranian households. To do so, first, we use Hamilton's approach to estimate a Spatial Price Index (SPI) helping us to have a better household welfare criterion. Second, using a developed version of Gini bidimensional decomposition, we find the contribution of rural and urban areas to inequality. Our decomposition method is an improved version of Mussard (2004) bidimensional decomposition method. Our results indicate that while Iranian authorities repeatedly have claimed that income inequalities have improved after the targeted cutting of subsidies in 2011, the above improvement is due to a bias in regional price indices.
    Keywords: decomposition, welfare, distribution, Iran
    JEL: D12 D31 D33 D63 E25 E31 R12
    Date: 2014–07–18
  9. By: International Monetary Fund. Middle East and Central Asia Dept.
    Abstract: KEY ISSUES Context. Saudi Arabia’s economy has grown very strongly in recent years, benefitting from high oil prices and output, strong private sector activity, and government spending. It has played a systemic and stabilizing role in the global oil market. The economy has not been affected by the recent global financial market volatility. The Saudi population is young, growing, and increasingly well educated. Outlook and risks. The near term economic outlook is positive. Oil production is expected to be little changed from 2013, while non-oil growth will be underpinned by strong private sector activity and government spending on large projects in transportation infrastructure and housing. Inflation is expected to remain subdued. The main source of risk is the global oil market. Macroeconomic policies. Fiscal buffers are strong at present, providing macroeconomic policies with scope to respond to shocks. The current path of fiscal policy would, however, lead to a substantial erosion of these buffers over the medium-term. Fiscal adjustment needs to start to preserve these buffers and increase saving for intergenerational equity purposes. Monetary and macro-prudential policy settings are appropriate at present. Reforms to the macroeconomic policy framework can help strengthen macroeconomic management and create an environment conducive to private investment and job creation. Managing demographic pressures. A multi-pronged labor market reform program is increasing the employment of nationals in the private sector and improving the functioning of the labor market. An ambitious program to boost the supply of housing is also underway. Energy consumption is high, and price increases are needed to support efforts to increase energy efficiency and develop public transportation networks. Economic diversification. Creating a more diversified economy is a challenge given Saudi Arabia’s vast oil resources. The government is making considerable efforts to lay the groundwork for further diversification by upgrading infrastructure, strengthening education and skills, boosting access to finance for SMEs, and improving the business environment. However, more needs to be done to realign incentives to encourage firms to export and workers to seek jobs in the private sector.
    Keywords: Article IV consultation reports;Fiscal policy;Government expenditures;Debt sustainability;Fiscal reforms;Labor market reforms;Monetary policy;Bank supervision;Exchange rate assessments;Economic indicators;Staff Reports;Press releases;Saudi Arabia;
    Date: 2014–09–23
  10. By: Erdal Ozmen (Department of Economics, METU)
    Abstract: Bu calismada, Turkiye’nin dis ticaret dinamikleri inclenmekte ve ozellikle imalat sanayi (IS) sektorleri icin reel doviz kuru degismesinin dis ticarete etkisi arastirilmaktadir. Bu amacla, ihracat, ithalat ve uretimin belirleyicilerinin teknoloji yogunlugu, urun yetkinligi, ithalat bagimliligi, ihracat yonelimi, kuresel deger zincirlere eklemlenme derecesi, borc dolarizasyonu gibi sektore ozgun degiskenlere de bagli olup olmadigi ampirik olarak incelenmektedir. Calisma sonuclarina gore, Turkiye dis ticaret aciklari, temelde orta-yuksek ve yuksek teknoloji yogunlugu olan urun ithalatindan kaynaklanmaktadir. Sonuclara gore, 1990’li yillarla karsilastirildiginda, 2000’li yillarda ozellikle orta-yuksek ve yuksek teknoloji urunlerinde, IS sektorlerinin kuresel katma deger zincirlerine eklemlenme derecesi yuksek oranda artmistir. Bu eklemlenme, agirlikli olarak sektorlerin geri eklemlenme derecelerinde sicramali bir artis olarak gerceklesmis ve ihracatta yurtici katma deger oraninin yuksek oranda dusmesiyle eklemlenmenin net kaybi daha da artmistir. Esneklik kotumserligi yazini ile tutarli olarak, hem GEGS hem de IS sektorleri ihracat ve ithalatinin reel doviz kuru esnekliginin mutlak degeri goreli olarak dusuk bulunmustur. Ihracat ve ithalat, sirasiyla, agirlikli olarak yurtdisi (OECD) ve yurtici reel gelir tarafindan belirlenmektedir ve esneklikler cok yuksek duzeydedir. Orta-yuksek ve yuksek teknoloji yogunlugu urunlerinin yurtdisi reel kosullara olan duyarliliginin, digerlerine gore, cok daha yuksek oldugu bulunmustur. Urun yetkinligi temelindeki sonuclar da bu onermeyi desteklemektedir. 2001 yili sonrasinda, ihracatin yurtdisi talep esneklikleri tum teknoloji yogunlugu ve urun yetkinligi sektorlerinde sicramali olarak artmistir. Reel doviz kurunun dis ticaret etkisi sektorlerin teknoloji yogunlugu, urun yetkinligi, ithal girdi bagimliligi veya ihracat yonelim derecelerine gore degismektedir. Borc dolarizasyonu ile dis ticaretin reel kur esnekliklerinin ve IS uretiminde olumsuz bilanco riskinin arttigi bulunmustur. Sonuclara gore, IS sektorleri uretimi sadece yurtdisi reel kosullar tarafindan degil kuresel finansal kosullar tarafindan da belirlenmektedir. Reel doviz kurunun uretime etkisi sektorun dis ticaret yapisindan bagimsiz degildir. Tum bu sonuclar, surdurulebiilir yuksek buyume orani ve dusuk dis ticaret acigi icin, reel doviz kuru politikalari yerine, orta-yuksek ve yuksek teknoloji urunleri sektorlerinde kuresel deger zincirlerine ileri eklemlenme derecesini artirmaya yonelik stratejik sanayi politikalarinin tercih edilebilir oldugunu gostermektedir.
    Keywords: borc dolarizasyonu, cari islemler aciklari, dis ticaret aciklari, esneklik kotumserligi, ihracat, imalat sanayi, ithalat, kuresel deger zincirleri, reel doviz kuru, sanayi uretimi, teknoloji yogunlugu, Turkiye, urun yetkinligi, yurtici katma deger.
    Date: 2014–11

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