nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2017‒01‒08
seven papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Investigating the Trajectory of Egypt’s Potential Output: Pre and Post the Arab Spring By El-Baz, Osama
  2. The Impact of the Employment Protection Legislation Reform on the Labor Market’s Flexicurity in Morocco By Toufik, Said; Arkhis, Mohammed-Amine; Oukhallou, Youssef
  3. The Global Outlook, Secular Stagnation, and the MENA region By Uri Dadush
  4. The Degree of Currency Substitution and Exchange Rate Pass-Through By Ülke, Volkan
  5. Challenges that face cultural tourism development in conflict and post-conflict regions: the case of Kurdistan By Kadhim Magdid Braim; Scott McCabe; Jillian Rickly; Mohamed Gadi
  6. The Effect of Innovation on Productivity: Evidence from Turkish Manufacturing Firms By Fazlıoğlu, Burcu; Dalgıç, Başak; Yereli, Ahmet Burçin
  7. Fiscal Policy, Inequality and Poverty in Iran: Assessing the Impact and Effectiveness of Taxes and Transfers the Poor in the Developing World - Working Paper 442 By Ali Enami , Nora Lustig and Alireza Taqdiri

  1. By: El-Baz, Osama
    Abstract: The Egyptian economy has witnessed a plunge in its main macroeconomic indicators after the Arab spring as reflected in the estimated Economic Stability Trend Index (ESTI). The main purpose of the paper was to estimate Egypt's potential output and identify the factors that might be responsible for the divergence of actual and potential output from each other. The production function approach was used to derive estimates of both potential output and output gap over the period (1990-2014). The results of the analysis revealed that capital stock was the dominant factor contributing to potential GDP growth in Egypt, while the shares of both labor and total factor productivity in potential GDP growth rate have been fluctuating over time. Intellectual property protection, efficiency of the legal framework in settling disputes, strength of investor protection, and other factors exhibited a strong positive relationship with output gap in Egypt over the period (2010-2014).
    Keywords: Potential Output, Output Gap, Production Function, HP Filter
    JEL: E1 E17 E2 E22 E6
    Date: 2016–11–05
  2. By: Toufik, Said; Arkhis, Mohammed-Amine; Oukhallou, Youssef
    Abstract: This paper uses the OECD’s methodology to build an Employment Protection Legislation index (EPL) for the Moroccan economy. In this framework, the main objective is to assess the impact of the new Labor Code’s provisions on the degree of flexicurity in the labor market. The paper also investigates the approximate influence of the EPL changes as regards to some employment-related variables. Our results show that after the 2004 Labor Code reform, the labor market’s flexibility level went down from 75 percent to 44 percent, as EPL became significantly stricter. Furthermore, our analysis suggests that the new legislation, although it brought relatively strict restrictions on hiring and firing, generated a significant increase in dismissals during the three first years of its implementation. And unlike the buckle of conventional literature and several empirical findings, the unemployment rate actually dropped, allegedly backed-up by a solid GDP growth during the 2000’s.
    Keywords: Labor Market, Flexicurity, Employment Protection Legislation, EPL Index
    JEL: E24 J81 K31
    Date: 2016–12–17
  3. By: Uri Dadush
    Abstract: Despite the gloomy tone of much discussion at the just-concluded IMF and World Bank annual meetings, the global economy is not in as bad shape as many think. The concerns about “secular stagnation” in advanced countries are also overplayed, and nor are developing countries directly exposed to such risks. By contrast, the pessimism about the prospects for MENA are unfortunately largely justified. Most importantly, at the global and at the MENA level the biggest concerns are not economic, but political, and how the political context affects economic policies and the confidence of investors.
    Date: 2016–11
  4. By: Ülke, Volkan
    Abstract: This study investigates the effect of the degree of currency substitution on the exchange rate pass-through (ERPT) to import and domestic prices in Turkey, using monthly data between 1998 and 2013. The recursive interacted vector autoregressive (IVAR) specification of Towbin and Weber (2013) is employed, based on McCarthy’s (1999) distribution chain model. Currency substitution is treated as an interaction term in the IVAR specification. The empirical evidence suggests that high currency substitution increases the effect of ERPT to import and domestic prices.
    Keywords: Exchange rate pass-through; currency substitution; inflation; interacted VAR.
    JEL: C32 E31 E52 F31
    Date: 2015–09–15
  5. By: Kadhim Magdid Braim; Scott McCabe; Jillian Rickly; Mohamed Gadi
    Abstract: Tourism has multiple economic benefits for host countries that receive tourists. Policy makers are becoming more and more aware of the importance that appropriate tourism management has to maximise the benefits that tourism flows can bring. However, many developing countries suffer from a lack of an integrated tourism policy. Particular issues are faced in those countries that are dealing with local conflicts (sometimes over many years). These countries often lack investment in tourism resources even though they might have a huge potential and are rich in heritage and cultural assets. Conflict always changes the priorities of nations, and poses many challenges to the policy, and management for developing tourism as a viable economic sector. Post-conflict areas have barriers to tourism development, such as poor or damaged infrastructure, lack of services, low investment, political instability, a need to maximize revenue income, and the lack of planned tourism management. A current example of such a conflict area is Kurdistan. In 2013, the number of tourists were 2,952 027, yet in 2014 and 2015 the number had decreased to 1529434 and 1117501 respectively (General Board of Tourism, Kurdistan Regional Government, 2016). In addition, as a result of popular uprisings that occurred across the Middle East, there was a decline of 8% in tourism growth in these destination regions during 2011 (UNWTO, 2012). There is much research about cultural tourism management issues, challenges, sustainability, but there is a lack of studies undertaken to know how post-conflict issues interact or change or the effects of emergent situations on cultural and heritage tourism planning and management. Kurdistan, which is largely defined as a northern region of modern Iraq, can be considered one of the longest conflict areas since the end of World War 1, and has suffered from neglect of investment in its economic infrastructure over many decades. After the new Kurdistan self-governing region was recognised officially by the Iraqi government in 2003, there has been a sharp increase in the number of tourism arrivals, in particular, in last ten years, due to its location, climate and heritage. Tourism is seen as an important economic sector in Kurdistan and specifically leisure tourism. However, there is still wide scope to increase tourism in Kurdistan based on its diversity of cultures and cultural heritage sites. The UN World Tourism Organization estimated that cultural tourism currently accounts for 37% of the aggregate tourism in the world (Boyd, 2002; McKercher and Cross, 2002). Such potentially profitable tourism resources in Kurdistan has been neglected so far for the purpose of tourism. This paper aims to fill this gap and explore potentials and issues for developing cultural tourism in post conflict areas and in new autonomous regions such as Kurdistan, and to understand what cultural tourist strategy should be designed and implemented to develop tourism sector in Kurdistan to be successful, competitive and sustainable. By looking of the perspective of different stakeholders in Kurdistan, the study can understand the challenges and opportunities in developing cultural tourism in post conflict areas. The paper reports data from a series of focus groups conducted with residents and tourist, and in-depth interviews with policy makers and tourism experts in Erbil, Kurdistan, in 2015.
    Keywords: ???
    Date: 2016–12
  6. By: Fazlıoğlu, Burcu; Dalgıç, Başak; Yereli, Ahmet Burçin
    Abstract: This paper explores the effects of firms’ innovation activities on their productivity changes systematically for Turkish manufacturing firms differentiating between different typologies of innovation. To do so, we utilize a recent and comprehensive firm level dataset over the period 2003-2014, mainly constructed on the four consecutive waves of the “Community Innovation Surveys”. We employ endogenous switching methodology controlling for endogeneity and selection bias issues as well as analyzing counterfactual scenarios. The main finding of the study points to firm heterogeneity in terms of both propensity to innovate and their benefiting from innovation activities. Our results indicate that all types of innovation activity have positive effects on the productivity of firms with respect to non-innovating firms. Further, we find robust evidence for the differential impact of innovation on firm productivity across different innovation types.
    Keywords: Internal and External R&D, Product and Process Innovation, Organizational and Marketing Innovation, Firm Productivity
    JEL: D22 L25 O30
    Date: 2016–12–23
  7. By: Ali Enami , Nora Lustig and Alireza Taqdiri
    Abstract: Using the Iranian Household Expenditure and Income Survey (HEIS) for 2011/12, we apply the marginal contribution approach to determine the impact and effectiveness of each fiscal intervention, and the fiscal system as a whole, on inequality and poverty. Net direct and indirect taxes combined reduce the Gini coefficient by 0.0644 points and the headcount ratio by 61 percent. When the monetized value of in-kind benefits in education and health are included, the reduction in inequality is 0.0919 Gini points. Based on the magnitudes of the marginal contributions, we find that the main driver of these reductions is the Targeted Subsidy Program, a universal cash transfer program implemented in 2010 to compensate individuals for the elimination of energy subsidies. The main reduction in poverty occurs in rural areas, where the headcount ratio declines from 44 to 23 percent. In urban areas, fiscally-induced poverty reduction is more modest: the headcount ratio declines from 13 to 5 percent. Taxes and transfers are similar in their effectiveness in achieving their inequality-reducing potential. By achieving 40 percent of its inequality-reducing potential, the income tax is the most effective intervention on the revenue side. On the spending side, Social Assistance transfers are the most effective and they achieve 45 percent of their potential. Taxes are especially effective in raising revenue without causing poverty to rise, indicating that the poor are largely spared from being taxed. In contrast, since the bulk of transfers are not targeted to the poor, they are not very effective: the most effective ones achieve 20 percent of their poverty reduction potential. The effectiveness of the Targeted Subsidy Program could be improved by eliminating the transfer to top deciles and re-allocating the freed funds to the poor.
    Keywords: inequality, poverty, marginal contribution, CEQ framework, policy simulation
    JEL: D31 H22 I38
    Date: 2016–11

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