nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2015‒07‒11
seven papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Designing a new EU-Turkey strategic gas partnership By Simone Tagliapietra; Georg Zachmann
  2. Evolving patterns of payment methods in Turkish foreign trade By Turkcan, Kemal
  3. Voter Reaction to Government Incompetence and Corruption Related to the 1999 Earthquakes in Turkey By Akarca, Ali T.; Tansel, Aysit
  4. Public Preferences for Carbon Tax Attributs By Z. Eylem Gevrek; Ayse Uyduranoglu
  5. Simultaneous Monetary Policies in the Context of the Trilemma: Evidence from the Central Bank of Turkey By Yasin Kursat Onder; Mauricio Villamizar-Villegas
  6. Causality and cointegration between export, import and economic growth: evidence from Morocco By El Alaoui, Aicha
  7. Pyramid capitalism : political connections, regulation, and firm productivity in Egypt By Diwan,Ishac; Keefer,Philip E.; Schiffbauer,Marc Tobias

  1. By: Simone Tagliapietra; Georg Zachmann
    Abstract: â?¢ The European Commissionâ??s February 2015 Energy Union Communication calls for intensified work on the Southern Gas Corridor (SGC) and the establishment of a new strategic energy partnership with Turkey. The presence of the European Union and Turkey in the region is complementary in a number of ways. Building on this could unlock the regionâ??s gas export potential and make gas supplies to the EU and Turkey more secure. â?¢ The EU should establish dedicated energy diplomacy taskforces with Turkey and each potential supplier in the region (Azerbaijan, Turkmenistan, Iran, Kurdistan Region of Iraq). This would allow the EU and Turkey to make use of their complementary diplomatic leverages to overcome barriers to regional gas trade. â?¢ In parallel, the EU should establish with Turkey a dedicated financing mechanism to facilitate gas infrastructure investments, with a primary focus on the upgrade of the Turkish gas grid. The European Investment Bank might play a role in attracting private and institutional investors through its financing tools. â?¢ The four â??EU-Turkey Energy Diplomacy Taskforcesâ?? and the â??EU-Turkey Gas Infrastructure Financing Initiativeâ?? would be initiatives of the recently started EU-Turkey Strategic High Level Energy Dialogue
    Date: 2015–07
  2. By: Turkcan, Kemal
    Abstract: Serving the global marketplace brings many risks to the firm that they may not have on the domestic side. Apart from financing, trade finance mechanisms assist exporters and importers to mitigate or reduce their risks associated with doing business internationally. The present paper sheds lights on the structure and evaluation of payment methods in international trade as well as their changing composition due to 2008-2009 global financial crisis using a unique bilateral trade finance data from Turkey with 206 countries over the period 2002-2012 at the 2-digit level of ISIC Revision 3. Three key results emerge. First, Turkey’s exports are mainly financed via open account method while the majority of its imports were executed via cash-in advance method. Second, the shares of inter-firm trade finance (open account and cash-in advance) in Turkey’s foreign trade dramatically increased over the period 2002-2012, while the shares of the intermediate trade finance (cash against documents and letter of credit) decreased substantially. Finally, the evidence show that both exporters and importers started to use cash-in advance method, the safest method of payment, more intensively than other methods shortly after the global recession in 2008. Overall, the patterns presented in this paper highlight the fact that Turkish traders are not able to set payment terms that are highly favorable to themselves and bear all risks associated with international trade transactions.
    Keywords: Method of payments; Trade finance; Trade credit; Financial crisis; Turkey
    JEL: F10 F14 F30
    Date: 2015–07–03
  3. By: Akarca, Ali T. (University of Illinois at Chicago); Tansel, Aysit (Middle East Technical University)
    Abstract: Two major earthquakes which struck northwestern Turkey in 1999 exposed rampant corruption involving construction and zoning code violations. The government's relief efforts were tainted by corruption as well, and exhibited a great deal of incompetence. How voters responded to these in the next election held in 2002 is investigated. The fact that different group of parties were responsible for the construction of the shoddy buildings, and for the corruption and mismanagement related to relief, provided us with a unique opportunity to determine whether and how the electorate punished the culprits for each of these. Vote equations are estimated for the seven major political parties. These are fitted to cross-provincial data individually, using OLS, Robust Regression methods, and Seemingly Unrelated Regressions procedures. The same picture emerges from each of these methods. Not just those ruling at the time of the earthquakes, but also other parties which were in power when the substandard buildings, were built were held accountable by the electorate. Furthermore, the Turkish voters appear to have allocated the blame rationally, taking into consideration the division of labor in the central government, and the relative influences the parties had on local administrations. Reaction of the voters to government incompetence and corruption was one of the factors which resulted in the emergence of a new party system. In 2002, the AKP, established only a year before, captured almost all of the far-right Islamist, about half of the far-right nationalist, and more than half of the center-right votes in 2002.
    Keywords: natural disaster, corruption, disaster aid, governance, election, voter behavior, voter turnout, Turkey
    JEL: D72 D73 H84 Q54
    Date: 2015–06
  4. By: Z. Eylem Gevrek (Department of Economics, University of Konstanz, Germany); Ayse Uyduranoglu (Istanbul Bilgi University, Turkey)
    Abstract: The impacts of climate change are already visible throughout the world. Recognizing the threats posed by climate change, the Durban Platform, the 17th Session of the Conference of Parties (COP 17), underscores that the global nature of climate change calls for the widest possible cooperation and ambitious action by all countries. A crucial starting point for the design of effective and publicly acceptable policies is to explore public preferences for climate policy instruments. Using a choice experiment, this study investigates public preferences for carbon tax attributes in a developing country context. The results account for heterogeneity in preferences and show that Turkish people prefer a carbon tax with a progressive cost distribution rather than one with a regressive cost distribution. The private cost has a negative effect on the probability of choosing the tax. Earmarking carbon tax revenues increases the public acceptability of the tax. Moreover, there is a preference for a carbon tax that promotes public awareness of climate change.
    Keywords: Carbon taxes, Choice experiment, Latent class model, Mixed logit model, Preferences, Turkey
    JEL: H Q
    Date: 2015–07–08
  5. By: Yasin Kursat Onder; Mauricio Villamizar-Villegas
    Abstract: Many central banks that have opted for monetary autonomy have also been reluctant to relinquish control over the value of their currencies. As a result, they have operated through both interest rate and foreign exchange interventions. However, in the context of the monetary trilemma, both effects can potentially offset each other. Using daily data from the Central Bank of Turkey during the period of 2002 - 2010, we study the effects of simultaneous policies by first purging the intended monetary decisions from responses to real-time macroeconomic variables, and then determining their impact on economic activity. We find that the Central Bank of Turkey adjusted its policy rate mostly in response to inflation levels relative to both the yearly target and agents’ expectations, and conducted purchases and sales of foreign currency in response to exchange rate behavior. These responses varied depending on whether interventions were pre-announced. We also find that unannounced purchases of foreign currency had a significant effect in reducing exchange rate volatility but appeared to have no effect on exchange rate changes. On the other hand, changes in the policy rate significantly affected inflation but had no discernible effect on output growth.
    Keywords: Central bank intervention, simultaneous policies, monetary shocks, price puzzle, monetary policy trilemma, foreign exchange intervention
    JEL: E43 E52 E58 F31
    Date: 2015–07–03
  6. By: El Alaoui, Aicha
    Abstract: This article investigates the relationship between export, import and economic growth using annual time series data for the Moroccan economy over the period 1980-2013. The cointegration technique has been employed to see the long run equilibrium relationship among variables. For this end, Granger causality test based on vector error correction model (VECM) has been adopted to see both short and long run causality among the variables. The cointegration results confirm the existence of the long-run relationship among these variables. For the short-run causality, the findings suggest (i) bidirectional causality between economic growth and import, (ii) unidirectional causality that run from export to import, and (iii) no-directional causality between economic growth and export.
    Keywords: Economic Growth, Export, Import, Granger Causality, Cointegration, VECM, Morocco
    JEL: C32 F41 O11
    Date: 2015–06
  7. By: Diwan,Ishac; Keefer,Philip E.; Schiffbauer,Marc Tobias
    Abstract: This paper uses an original database of 469 politically connected firms under the Mubarak regime in Egypt to explore the economic effects of close state-business relations. Previous research has shown that political connections are lucrative. The paper addresses several questions raised by this research. Do connected firms receive favorable regulatory treatment? They do: connected firms are more likely to benefit from trade protection, energy subsidies, access to land, and regulatory enforcement. Does regulatory capture account for the high value of connected firms? In the sample, regulatory capture as revealed by energy subsidies and trade protection account for the higher profits of politically connected firms. Do politically connected firms hurt aggregate growth? The paper identifies the growth effects of the entry of politically connected firms by comparing detailed 4-digit sectors where they entered, between 1996 and 2006, and sectors that remained unconnected. The entry of connected firms into new, modern, and previously unconnected sectors slows aggregate employment growth and skews the distribution of employment toward less productive, smaller firms.
    Keywords: E-Business,Small Scale Enterprises,Economic Theory&Research,Banks&Banking Reform,Microfinance
    Date: 2015–07–02

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