nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2019‒01‒07
seventeen papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Youth Unemployment in the Middle East & North Africa, and the Moroccan case By Uri Dadush
  2. The EU-Tunisia Deep and Comprehensive Free Trade Area (DCFTA): Macroeconomic impacts and pro-developmental policy responses By Tröster, Bernhard; Raza, Werner; Grohs, Hannes; Grumiller, Jan; Staritz, Cornelia; von Arnim, Rudi
  3. Assessing the EU-North Africa trade agreements By Uri Dadush; Yana Myachenkova
  4. The Impact of Mass Migration of Syrians on the Turkish Labor Market By Ege Aksu; Refik Erzan; Murat Guray Kirdar
  5. Deindustrialization and Employment in Morocco By Uri Dadush; Abdelaaziz Aït Ali
  6. Will the Emerging Market Turmoil be Contained By Uri Dadush; Hamza Saoudi
  7. Does aid enhance growth? By Yahyaoui, Ismahen; Bouchoucha, Najeh
  8. High Tech and Venture Capital Inflows: The case of Israel By Assaf Razin
  9. Kuwait; Technical Assistance Report-Government Finance Statistics By International Monetary Fund
  10. The United Arab Emirates as an emerging actor in the Western Balkans: the case of strategic investment in Serbia By Bartlett, Will; Ker-Lindsay, James; Alexander, Kristian; Prelec, Tena
  11. Accounting for Protest Attitudes in Willingness to Pay for Universal Health Coverage By Mohammad Abu-Zaineh; Olivier Chanel; Khaled Makhloufi
  12. Future of African Cities Project: Rabat and Salé – Bridging the Gap By Nchimunya Hamukoma; Nicola Doyle; Archimedes Muzenda
  13. The gruesome murder of Jamal Khashoggi : Saudi Arabia's new economy dream at risk ? By Jamal Bouoiyour; Refk Selmi
  14. The Impact of Mass Migration of Syrians on the Turkish Labor Market By Ege Aksu; Refik Erzan; Murat Giray Kirdar
  15. The characteristics of mergers and acquisitions and their impact on performance in emerging countries: A Saudi Arabian study By Sara Khotbi; Patrick Rousseau
  16. Contribution des facteurs et de la productivité globale des facteurs à la croissance agricole au Maroc : une évaluation comparée intersectorielle et inter pays By Mohammed Rachid Doukkali; Tharcisse Guèdègbé
  17. Rôle du régime de change flexible dans l’ajustement macroéconomique : cas du Maroc By Abdelaaziz Aït Ali

  1. By: Uri Dadush
    Abstract: This Policy Paper aims to provide a better understanding of the drivers of youth unemployment in the Middle East and North Africa (MENA) region by examining some common factors and then delving deeper into the case of Morocco, a relatively stable country that has historically been a source of large emigration, especially towards Europe. The MENA region has some of the highest total and youth unemployment rates in the world. High youth unemployment is especially worrisome because it can have lasting effects on lifetime employability and can be the cause of political instability. Migration pressures can increase as it tends to be the young that emigrate. The analysis in this paper argues that even though the rate of growth of the region’s young population is likely to moderate over the next few years, it is expected to experience another bulge in the 2020’s, and high unemployment is likely to remain a persistent feature in the foreseeable future in several MENA countries.
    Date: 2018–12
  2. By: Tröster, Bernhard; Raza, Werner; Grohs, Hannes; Grumiller, Jan; Staritz, Cornelia; von Arnim, Rudi
    Abstract: The European Union (EU) and Tunisia launched negotiations on a Deep and Comprehensive Free Trade Area (DCFTA) in 2015. So far, progress has been limited. The enhanced integration of the Tunisian economy into the EU single market involves several controversial topics. Above and beyond the elimination of tariffs in sensitive agricultural sectors, these concern in particular the liberalization of trade in services, investment and public procurement. At the same time, the negotiations take place under challenging economic, political and social circumstances within the country and the MENA region, which call for a particularly prudent approach. Our assessment of expected economic impacts points to negative GDP effects and minor employment effects in Tunisia in the short to medium term in the case of full tariff liberalization and extensive harmonisation of the regulatory frameworks. Therefore, in the negotiations, the EU should prioritize short-term benefits for the Tunisian economy, mitigate adjustments costs and pro-actively support productive development and upgrading.
    Date: 2018
  3. By: Uri Dadush; Yana Myachenkova
    Abstract: The trade agreements that the European Union has with North African countries – with Algeria, Egypt, Morocco and Tunisia – are often seen as having delivered disappointing results since they came into force during the 2000s. The four North African countries have seen insufficient growth in their exports to the EU, and have undergone only limited diversification. In the meantime, the EU’s exports to North Africa have grown quite rapidly. Economic growth in North Africa has been well short of what is needed to reduce chronic under-employment, especially of young people. The EU trade agreements with North Africa could generate additional, large benefits if they either directly led to or at least incentivised behind-the-border reforms to make the North African countries more competitive in international markets. Though this reform is the responsibility of the governments of North African countries, the EU could provide stronger incentives to improve the business environment. Meanwhile, in agriculture, were the North African countries able to compete with the EU on an even playing field, agriculture’s share of domestic value-added would almost certainly be significantly larger and rural poverty correspondingly lower than at present. Nevertheless, the agreements have been judged too harshly. They helped generate large amounts of trade, though not enough was done on the domestic front to derive the maximum benefit from them. Moreover, the domestic and international environment has been unfavourable, impeding North Africa’s progress. Over much of the relevant period, the EU grew sluggishly, and North African countries faced sharply increasing competition on European markets from China and the eastern Europe countries that joined the EU in 2004 and after. Generally, countries that acceded to the EU have done much better than the countries of North Africa. While the countries of North Africa are not EU candidates, there is much that they and the EU can learn from the example of the former accession countries in terms of how a new generation of trade agreements between the EU and North Africa could be deeper and more comprehensive than currently, and could be accompanied by increased aid for trade.
    Date: 2018–11
  4. By: Ege Aksu (The Graduate Center, CUNY, Economics); Refik Erzan (Department of Economics, Bogazici University); Murat Guray Kirdar (Department of Economics, Bogazici University)
    Abstract: We estimate the effects of the arrival of 2.5 million Syrian migrants in Turkey by the end of 2015 on the labor market outcomes of natives, using a difference-in-differences IV methodology. We show that relaxing the common-trend assumption of this methodology -unlike recent papers in the same setting- makes a substantial difference in several key outcomes. Despite the massive size of the migrant influx, no adverse effects on the average wages of men or women or on total employment of men are observed. For women, however, total employment falls -which results mainly from the elimination of part-time jobs. While the migrant influx has adverse effects on competing native workers in the informal sector, it has favorable effects on complementary workers in the formal sector. We estimate about one-to-one replacement in employment for native men in the informal sector, whereas both wage employment and wages of men in the formal sector increase. Our findings, including those on the heterogeneity of effects by age and education, are consistent with the implications of the canonical migration model. In addition, increases in prices in the product market and in capital flow to the treatment regions contribute to the rise in labor demand in the formal sector.
    Keywords: Labor Force and Employment; Wages; Immigrant Workers; Formal and Informal Sectors; Syrian Refugees; Turkey; Difference-in-differences; Instrumental Variables.
    JEL: J21 J31 J61 C26
    Date: 2018–12
  5. By: Uri Dadush; Abdelaaziz Aït Ali
    Abstract: This policy brief shows that the downward trend of employment in manufacturing in Morocco is due primarily to labor productivity improvement and that the increased deficit in manufacturing trade also plays an important role. While recognizing the crucial importance of a vibrant manufacturing sector in Morocco, this brief argues that Morocco cannot rely primarily on manufactures to “pull” labor out of agriculture. To provide more jobs, Moroccan policies should pay more attention to sectors which employ large numbers of people and where employment is expanding as a result of the ongoing structural transformation of the Moroccan economy.
    Date: 2018–11
  6. By: Uri Dadush; Hamza Saoudi
    Abstract: •Emerging market economies (EMs), as a group, continue to exhibit solid growth. This is the case especially in Asia and among oil-exporters, supported by growth in the advanced economies, the recovery in world trade, and the resilience of non-oil commodity prices. •However, financial markets have become very nervous about the prospects for several EMs, reflecting specific weaknesses in several countries – Argentina and Turkey stand out - and the prospect of higher international interest rates. •Though many lessons from past crises have been learnt, economic fundamentals in the EMs vary greatly, and contagion is quite possible. •The current episode will probably remain contained and the ongoing global economic expansion is unlikely to be derailed. However, if international risks – such as an escalation in trade conflicts – materialize, this picture could change quite suddenly. •The MENA region is more sheltered than other EMs from the turmoil, but it is certainly not immune, and caution is required.
    Date: 2018–11
  7. By: Yahyaoui, Ismahen; Bouchoucha, Najeh
    Abstract: In recent years, the volume of international aid has increased, from rich countries to poor countries. Despite the importance of this aid, developing countries have not even been able to catch up with emerging countries, contrary to the expectations of convergence theories. Thus, the purpose of this article is to examine the short and the long term impact of foreign aid on economic growth in the case of Tunisia. The paper opted to use a VECM model to examine the long-term relationship of foreign aid on growth. The data cover from the year 1980 to 2013 in the case of Tunisia. The results obtained through VECM model, three are statistically significant. The empirical results are showing that Official Developped Aid affects positively the Tunisian economic growth. On the other hand, there is a long-term relationship between the two variables. In addition, the effectiveness of aid in terms of economic growth is more important in the long term than in the short term.
    Keywords: economic growth, Official Developped Aid, effectiveness, long-term relationship, VECM
    JEL: F35
    Date: 2018–12–30
  8. By: Assaf Razin
    Abstract: Large capital inflows are understandably viewed as dangerous in emerging markets living with memories of recent currency crises: in Israel foreign capital provided crucial funding for investment in the country’s showcase technology sector. Israel is now solidly established as a high-tech powerhouse—a place where budding venture capitalists from emerging market countries flock to learn how to develop an innovation ecosystem. However, the domestic market alone is far too small and homegrown capital formation insufficient to foster that innovation. Globalization has been essential. The paper reviews the crucial role which globalization forces played Israel’s transformation from low tech to high tech economy. Special emphasis is placed on foreign direct investment as a driver for the high-tech transformation.
    JEL: F21
    Date: 2018–12
  9. By: International Monetary Fund
    Abstract: In response to a request from the Central Statistical Bureau (CSB) of Kuwait, a government finance statistics (GFS) technical assistance (TA) mission visited Kuwait City, Kuwait during April 29–May 3, 2018. This first GFS TA mission from the IMF’s Statistics Department (STA) aimed to assist the CSB staff in compiling fiscal data according to the Government Finance Statistics Manual 2014 (GFSM 2014) and help them to issue this year’s GFS bulletin according to the GFSM 2014 classification. In addition, the mission discussed with the Ministry of Finance (MoF) the possibility of resuming the reporting of the GFS data to the Fund for surveillance and dissemination in Government Finance Statistics Yearbook (GFSY).
    Keywords: Kuwait;Middle East;
    Date: 2018–11–20
  10. By: Bartlett, Will; Ker-Lindsay, James; Alexander, Kristian; Prelec, Tena
    Abstract: In recent years, the United Arab Emirates has increased its engagement on the international stage. One area where it has been increasingly active is the Western Balkans. While its aid programmes were initially directed towards Albania, it has also started to invest in Bosnia and Herzegovina, Kosovo, Montenegro and Serbia. This paper focuses mainly on the last of these: UAE commercial investment in Serbia. As is shown, this activity has been focused on four key sectors: aviation, urban construction, military technology and agriculture, chosen to reflect different strategic imperatives. Whereas investments in agriculture and military technologies are part of a strategy of risk mitigation in respect of food security and military security, the investments in aviation and construction form part of a wider strategic policy of economic diversification in anticipation of the post-oil economy. Meanwhile, viewed from the Serbian perspective, these investments have not been without controversy because of their lack of transparency, allegations of corruption, and lack of public debate over plans to transform downtown Belgrade with a substantial new investment in urban regeneration. Serbia’s willingness to host strategic investment from the UAE is also surprising because of UAE support for Kosovo and claims that it has come with questionable political demands. Nevertheless, there is little doubt that UAE investments are a welcome boost to an ailing and crisis ridden economy.
    Keywords: United Arab Emirates; Foreign Direct Investment; Serbia; Kosovo
    JEL: F3 G3
    Date: 2017–06–22
  11. By: Mohammad Abu-Zaineh (Faculty of Medicine, Aix-Marseille Univ, INSERM - Institut National de la Santé et de la Recherche Médicale, IRD - Institut de Recherche pour le Développement, SESSTIM - U912 INSERM - AMU - IRD - Sciences Economiques et Sociales de la Santé & Traitement de l'Information Médicale - IRD - Institut de Recherche pour le Développement - AMU - Aix Marseille Université - INSERM - Institut National de la Santé et de la Recherche Médicale, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Olivier Chanel (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, IDEP - Institut d'Économie Publique - GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales); Khaled Makhloufi (Faculty of Medicine, Aix-Marseille Univ, INSERM - Institut National de la Santé et de la Recherche Médicale, IRD - Institut de Recherche pour le Développement, SESSTIM - U912 INSERM - AMU - IRD - Sciences Economiques et Sociales de la Santé & Traitement de l'Information Médicale - IRD - Institut de Recherche pour le Développement - AMU - Aix Marseille Université - INSERM - Institut National de la Santé et de la Recherche Médicale)
    Abstract: In their attempts to implement universal health coverage (UHC), different developing countries encounter different types of obstacles. In Tunisia, major challenges include a widespread informal sector and protestors' general discontent with rising economic insecurity and inequality, the rollback of the state and public welfare. We apply a contingent valuation survey to a non-healthcare-covered Tunisian sample vis-à-vis joining and paying for a health insurance scheme. We pay attention to the nature of the willingness- to-pay (WTP) values obtained, distinguishing genuine null from protest values. The latter may reflect not only protesters' beliefs regarding the survey, but also their lack of trust in government's commitment to ensuring the provision of quality healthcare. We use alternative econometric modeling strategies to account and correct for selection issues arising from protest answers. Our results support the presence of self- selection and, by predicting protesters' WTP, allow the "true" sample mean WTP to be computed. This appears to be about 14% higher than the elicited mean WTP. The WTP of the poorest non-covered respondents represents about one and a half times the current contributions of the poorest formal sector enrollees, suggesting that voluntary affiliation to the formal health insurance scheme could be a step towards achieving UHC. Overall, we highlight the importance of taking into account protest positions for the evaluation of progress towards UHC.
    Keywords: willingness-to-pay,contingent valuation,universal health coverage,self-selection,protest attitude
    Date: 2018–12
  12. By: Nchimunya Hamukoma; Nicola Doyle; Archimedes Muzenda
    Abstract: The twin cities of Rabat and Salé on Morocco’s west coast embody prominence in Morocco’s past and present, Rabat as capital and Salé as the third most populous city. Less than 20 years ago, however, Salé was charac¬terised by large slums, high unemployment, poor service delivery and limited mobility. Today, it is a changed city, providing housing to the majority of Rabat’s working class, with a modern tram linking the two cities. Morocco’s ‘Cities without Slums’ programme, launched in 2004, has changed the face of cities across the country. With 60 per cent of the population now living in urban areas, this heroic effort, underpinned by strong economic growth, offers lessons to other African cities facing rapid urbanisation and social unrest. In Rabat and Salé, a shift towards decentralised governance and a clear focus on encouraging private invest¬ment in infrastructure projects have also contributed to rapid improvement. This Paper investigates the success and shortcomings of Rabat and Salé in the areas of governance, security, economic growth, housing, transportation and service delivery. The story of these cities show that while history is important, it is not deterministic, and that with a combination of consistent urban policy, strong leadership and effective public-private partnerships, it is possible to turn a city around within 20 years.
    Date: 2018–11
  13. By: Jamal Bouoiyour (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour, IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC Pau); Refk Selmi (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour, IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC Pau)
    Abstract: With the horrific Jamal Khashoggi killing, Mohammed Bin Salman's image in the international community has been damaged. This study seeks to test whether Khashoggi murder discourage businesses from investing in Saudi Arabia. We use an event-study methodology and asset pricing model to assess, at sectoral level, the dynamics of stock prices surrounding the killing of the Saudi journalist on 2 October at the kingdom's consulate in Istanbul. A series of robustness tests, including the Corrado ranking test and the non-parametric conditional distribution approach, have been conducted. We consistently show that the khashoggi killing had the most adverse impact on banks and financial services, materials, and technology. Oil and gas companies, however, were moderately or insignificantly affected. Overall, our results suggest that the crown prince's ambitious project for a Saudi Arabian economy moving beyond oil wealth are threatened as this recent event dampened foreign interest in investing in the kingdom.
    Keywords: Saudi Arabia,Stock markets,Khashoggi crisis,Sectoral-level analysis
    Date: 2018–12–24
  14. By: Ege Aksu; Refik Erzan; Murat Giray Kirdar
    Date: 2018–04
  15. By: Sara Khotbi (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Patrick Rousseau (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon)
    Abstract: Mergers and acquisitions are attracting interest from financial researchers who are trying to determine the performance of these high-risk operations. It is not easy to identify variables that precisely map into the various factors that affect value creation through cross border mergers and acquisitions nor to pick an appropriate performance indicator because the definitions of performance vary in terms of accounting, financial and operational views. In this paper, we focused on the impact of the characteristics of the transaction on the corporate financial performance of mergers and acquisitions, which are return on investment, return on equity and Marris ratio, using data on the deals that occurred during the period 2010-2015 in Saudi Arabia. Panel data and precisely random effect method are applied to carry out empirical analysis. In this paper, we examine whether specific merger characteristics impact the M&A's performance. The results show that the performance is negatively influenced by the level of indebtedness for the 3 performance indicators and by the sectorial proximity for the return on equity. The cash level has a very slight positive impact on the 3 indicators. Concerning the other explanatory factors, they do not have a significant effect on performance for the acquiring firms.
    Keywords: Emerging economies,Mergers and acquisitions,Operation characteristics,Performance measures
    Date: 2018–11–23
  16. By: Mohammed Rachid Doukkali; Tharcisse Guèdègbé
    Abstract: Le progrès économique et social du Maroc passe par des objectifs de croissance dans l’agriculture, secteur prioritaire dans les stratégies et les politiques de développement. Plus encore, les gains de productivité globale des facteurs sont déterminants pour l’amélioration du niveau de vie. Le présent travail de recherche a consisté à comprendre l’évolution de la performance du secteur agricole au Maroc, en étudiant les contributions relatives des facteurs de production et de la productivité globale des facteurs. Ceci en observant ce qui se passe au niveau des deux autres secteurs de l’économie sur la période 1989-2014. Pour ce faire, le travail a adopté une approche comparative pour situer les performances marocaines dans la région méditerranéenne et a aussi observé comment la dernière crise financière internationale a affecté les contributions factorielles à la croissance par secteur. Suite à l’utilisation de la méthode de l’inventaire perpétuel, pour estimer le stock de capital, et de méthodes économétriques, pour obtenir une mesure ajustée de la terre qui tient compte des différences relatives de productivité, l’approche méthodologique de la comptabilité de la croissance ou Growth Accounting a été employée pour l’estimation des gains de productivité globale des facteurs et la déduction des contributions relatives des facteurs à la croissance. Il s’en suit, des évolutions assez dissemblables entre les pays du nord de la Méditerranée et ceux du sud et de l’est. Au Maroc, la terre a rapidement contribué à la croissance du secteur agricole entre 2008 et 2014. De façon similaire, le travail a contribué à la croissance du secteur agricole marocain jusqu’en 2005, puis en 2013 et 2014. En parallèle, parmi les quatre pays de l’est et du sud de la Méditerranée, considérés, le Maroc a enregistré les plus faibles taux de croissance de l’emploi et, donc, de sa contribution à la croissance de l’industrie et des services. Le facteur capital a positivement contribué à la croissance dans tous les secteurs au Maroc et encore plus pendant la période de la crise financière. Dans les huit pays étudiés, l’agriculture est le secteur qui a enregistré le taux de croissance annuel moyen de productivité le plus élevé. Ceci aussi bien globalement entre 1990 et 2014 que par période, 1990-2007 et 2008-2014. On relève, de plus, que l’agriculture marocaine a enregistré le taux de croissance annuel moyen de la productivité globale des facteurs le plus élevé sur la période 1989-2014.
    Date: 2018–10
  17. By: Abdelaaziz Aït Ali
    Abstract: Le Maroc a initié une première étape vers l’adoption d’un régime de change flexible, en élargissant les bandes de fluctuations à +/- 2,5% par rapport à un cours central. Cette transition permettrait à l’économie marocaine de se doter, à terme, d’un instrument macroéconomique qui joue le rôle d’amortisseur de choc et qui favorise un ajustement rapide et à moindre coût. A défaut de ce mécanisme, l’ajustement aux chocs macroéconomiques a, parfois, nécessité une contraction de la demande et, ainsi, un ralentissement conjoncturel de la croissance, pour restaurer les équilibres externes. L’élargissement des bandes de fluctuations constitue une première étape pour le passage vers un régime de flottement géré à long terme, qui confère toutefois un rôle important à la banque centrale pour le lissage des fluctuations du taux de change.
    Date: 2018–12

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