nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2019‒04‒15
twelve papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Arab Republic of Egypt; Fourth Review Under the Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt By International Monetary Fund
  2. Private Benefits, Fiscal Costs, and Economic Resource Costs of the Private Defined Contribution Pension Systems in Turkey By Glenn P. Jenkins; Godwin O Olasehinde-Williams; Roya Amel
  3. Exploring inter-household transfers:An assessment using panel data from Turkey By Pelek, Selin; Polat, Sezgin
  4. The Value of Online Banking to Small and Meduim-Sized Enterprises: Evidence From Firms Operating in The UAE From Trade Zones By Parvaneh Shahnoori; Glenn P. Jenkins
  5. Returns to Investment in Education: The Case of Turkey By Patrinos, Harry; Psacharopoulos, George; Tansel, Aysit
  6. The potential impact of oil sanctions on military spending and democracy in the Middle East By Dizaji, S.F.
  7. Kuwait; 2019 Article IV Consultation; Press Release; Staff Report; and Statement by the Executive Director for Kuwait By International Monetary Fund
  9. Kuwait; Financial System Stability Assessment By International Monetary Fund
  10. Building consensus: Shifting strategies in the territorial targeting of Turkey's public transport investment By Davide Luca; Andrés Rodríguez-Pose
  11. The Effect of Parental Job Loss on Child School Dropout: Evidence from the Occupied Palestinian Territories By Di Maio, Michele; Nistico, Roberto
  12. Evaluation de la performance des institutions de microfinancement (IMF) : étude de cas des IMF de la région MENA By Tlili, Afef

  1. By: International Monetary Fund
    Abstract: Egypt’s macroeconomic situation has improved markedly since the initiation of the authorities’ reform program in November 2016. The liberalization of the foreign exchange market, prudent monetary policy, and ambitious fiscal consolidation have helped stabilize the macroeconomic environment. Growth has accelerated; external and fiscal deficits have narrowed; international reserves have risen; and public debt, inflation, and unemployment have declined. Fiscal savings were in part deployed to enhance social protection and ease the burden of adjustment on the poor. Furthermore, ongoing structural reforms aim at promoting private sector-led inclusive growth and job creation. The remainder of the Extended Fund Facility-supported program is focused on consolidating the gains in macroeconomic stabilization, further rebuilding fiscal buffers, and advancing reforms to ensure that lasting progress is achieved.
    Date: 2019–04–06
  2. By: Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus); Godwin O Olasehinde-Williams (Department of Economics, Eastern Mediterranean University, North Cyprus); Roya Amel (Department of Banking and Finance, Eastern Mediterranean University, North Cyprus)
    Abstract: This study addresses economic issues associated with the private defined benefit pension system in Turkey. The institutional arrangements in Turkey for administering the government securities held in such pensions are compared with two private defined contribution pension schemes in Canada. In Canada, pension participants can hold the insured securities of banks instead of government securities. In turn banks charge no management fees on pension accounts that hold such securities. In the Turkish private pension system, more than 20% of the total value of the pension investments in government bonds are lost through administration costs. In addition, there is a net fiscal cost to the Treasury of Turkey. Although the net return received by pension holders is approximately the same as in the Turkish system, taxes are fully collected in Canada on either the proceeds of the pensions or on the taxable income used to finance the private pension assets.
    Keywords: Private pensions, Turkey, pension administration costs, economic resource cost, Canada
    JEL: H20 J26 J32
    Date: 2019–02
  3. By: Pelek, Selin (Galatasaray University Economic Research Center); Polat, Sezgin (Galatasaray University Economic Research Center)
    Abstract: This paper aims to contribute to the growing literature on the crowding out/in effect of public transfers on private ones by using two consecutive four-year SILC panel data from Turkey covering years 2008-2011 and 2012-2015. Over the period under study, the number of beneficiaries has increased and the welfare system has expanded to segments of society that were uncovered before. In order to quantify the interaction between public and private transfers, we estimate the effects of public transfers on the amount and likelihood of receiving private transfers by controlling various household characteristics and individual heterogeneity through panel structure. We find that public transfers at the individual level lead to crowding out effects, while public transfers targeting household has no significant neutralizing effect on private transfers. Comparing results from different periods, we observe that the effect of both altruistic motive and crowding-out are decreasing. Additionally, we broaden the definition of standard private transfers to include rent-free (subsidized) housing support. Our results reveal that broadly defined private transfers have a downstream character, are less altruistically motivated and produce less crowding-out effect compared to standard definition.
    Keywords: Altruism; Private transfers; Public transfers; Welfare provision; Crowding-out; Correlated random effects; Turkey
    JEL: D64 I38 J18
    Date: 2019–04–10
  4. By: Parvaneh Shahnoori (Department of Economics, Eastern Mediterranean University, Mersin 10, Turkey and Payame Noor University, Bandar Abbas, Iran); Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)
    Abstract: This study estimates the willingness to pay of small and medium-sized enterprises (SMEs) for a business online banking services. The estimation utilizes a contingent valuation method employing data from 400 SMEs in the United Arab Emirates free zones. An interval regression model is used to identify company characteristics affecting WTP. The results indicate an average WTP for online banking of $518.50 per month. Firms engaging in international trade value these services at least 10% more than those with only domestic operations. Other variables that significantly affect WTP include number of employees and the transportation cost of using traditional branch banking.
    Keywords: contingent valuation method, interval regression model, willingness to pay, business online banking.
    JEL: C13 F10 G21
    Date: 2018–12
  5. By: Patrinos, Harry (World Bank); Psacharopoulos, George (Georgetown University); Tansel, Aysit (Middle East Technical University)
    Abstract: This paper estimates private and social returns to investment in education in Turkey, using the 2017 Household Labor Force Survey and alternative methodologies. The analysis uses the 1997 education reform of increasing compulsory education by three years as an instrument. This results in a private rate of return on the order of 16 percent for higher education and a social return of 10 percent. Using the number of children younger than age 15 in the household as an exclusion restriction, the analysis finds that returns to education for females are higher than those for males. Contrary to many findings in other countries, private returns to those working in the public sector are higher than those in the private sector, and private returns to those who followed the vocational track in secondary education are higher than those in the general academic track. The paper discusses the policy implications of the findings.
    Keywords: education, returns to education, Turkey
    JEL: I21 J24
    Date: 2019–03
  6. By: Dizaji, S.F.
    Abstract: This study examines how negative oil shocks (due to the oil boycotts) could affect the military expenditure and the quality of democracy in the oil rentier states of Middle East by applying the annual date from 1990 to 2017. I use both economic and political variables in a panel vector autoregressive (PVAR) model of oil boycotts. The estimated PVAR models show significant impacts of oil boycotts both on key economic factors (government revenues, defence and non-defence expenditures) and on the different indicators of the political system. Using panel impulse response functions (PIRFs) and a panel variance decomposition analysis (PVDC) based on the estimated PVAR model, the findings indicate that the responses of political institutions and different indexes of democracy such as electoral, liberal, participatory, deliberative, and egalitarian democracy to decreases in oil rents are positive and statistically significant, whereas the response of military spending is negative and significant. Moreover according to the results of the variance decomposition analysis the variations in oil rents and political situation explain considerable parts of the variation of defence expenditures in the Middle Eastern countries implying that defence expenditures are considerably influenced by oil rents fluctuations and the quality of political system in the Middle East. These results are not sensitive to different proxies for oil abundance (such as fuel exports and amount of oil production) and different indicators of political institutions (V-DEM democracy indexes and polity2), as well as different orderings of variables in the panel VAR system.
    Keywords: Middle East, oil rents, democracy, sanctions, military expenditures, Panel-Vector Autoregressive model
    JEL: F51 F13 F14
    Date: 2019–04–05
  7. By: International Monetary Fund
    Abstract: Growth has strengthened, and fiscal and external positions improved thanks to higher oil prices. The increased uncertainty about oil price prospects though underscores the need to reduce dependence on oil and increase savings for the future. The key priority is to build national consensus around equitable and well-sequenced reforms to underpin fiscal consolidation and promote the private sector. To gain broad support, reforms should improve the quality of public services, strengthen governance, and be supported by a vigorous communications campaign. Ample financial assets and low debt allow Kuwait to undertake the needed reforms from a position of strength.
    Date: 2019–04–02
  8. By: amr a.bary, amr
    Abstract: The focus of this paper is the discussion of the competitiveness facing SMEs in the Egyptian business environment by examining the opportunities and supports from the banking sector, government and SME employers. The purpose of this paper is to review the experiences of group of countries that have benefited greatly from SME development and have been able to achieve high economic growth rates. On the other hand, presented the problems facing the Egyptian economy in order to achieve rapid growth rates at the level of small and medium enterprises and finally propose the strategies that can contribute effectively to the development of these projects. Therefore, in this study the importance of SMEs for developing countries is considered. First, the definition, strengths and weakness of SME's business are mentioned. In the second section, case studies from other countries for SMEs are considered. Then, the nature of business in the Egyptian economy is discussed. Finally, the results the questionnaire reflects the current situation and the conclusions were sets according to these results.
    Keywords: Small and Medium Enterprises (SMEs), Challenges, Competitiveness, SME Development
    JEL: O11
    Date: 2019–02–09
  9. By: International Monetary Fund
    Abstract: Since the 2010 FSAP, the financial system has withstood the real-life stress test of a severe drop in oil prices and the authorities have strengthened their framework. Banks, which constitute the largest part of the financial sector, have maintained high capital ratios, comfortable liquidity buffers, and high provisions, while nonperforming loans (NPLs) reached historic lows in 2017. The authorities proactively developed their regulatory and supervisory framework, notably by implementing Basel III for banks and establishing a regulatory and supervisory agency for capital markets, the Capital Markets Authority (CMA). Kuwait’s limited economic diversification (characteristic of small oil-dependent economies) is directly reflected in the bank-centric financial sector. Banks have high concentrations to single borrowers, large depositors, and sectors, as well as significant common exposures. Risks to the financial sector are mostly external, stemming from oil price shocks, geopolitical tensions, and global financial developments. The risks are mitigated by sizeable sovereign financial assets, and by the ability of public entities to provide liquidity through large deposits.
    Date: 2019–04–02
  10. By: Davide Luca; Andrés Rodríguez-Pose
    Abstract: A growing amount of research explores how the allocation of regional development monies follows electoral reasons. Yet, the existing literature on distributive politics provides different and contrasting expectations on which geographical areas will be targeted. We focus on proportional representation (PR) systems. While in such settings governments have incentives to target core districts and punish foes', we suggest that when incumbents attempt to build a state-party image they may broaden the territorial allocation of benefits and even target opposition out-groups. We exploit data on Turkey's public transport investment for the period 2003-2014 and in-depth interviews to provide results in support of our hypothesis.
    Keywords: Public investment, transport infrastructure, distributive politics, politics of development, Turkey
    JEL: D72 H70 O18 O43
    Date: 2019–04
  11. By: Di Maio, Michele (University of Naples Parthenope); Nistico, Roberto (University of Naples Federico II)
    Abstract: We study the effect of parental job loss on child school dropout in developing countries. We focus on Palestinian households living in the Occupied Palestinian Territories and having the household head employed in Israel during the Second Intifada (2000-2006). We exploit quarterly variation in conflict intensity across districts in the OPT to instrument for Palestinian workers' job loss in Israel. Our 2SLS results show that parental job loss increases child school dropout probability by 9 percentage points. The effect varies with child and household characteristics. We provide evidence that the effect operates through the job loss-induced reduction in household income.
    Keywords: job loss, school dropout, conflict, Second Intifada, Occupied Palestinian Territories, Israel
    JEL: H56 I20 J63
    Date: 2019–03
  12. By: Tlili, Afef
    Abstract: This paper is about analyzing the performance of MFIs. In the microfinance sector, the definition of performance varies according to the purpose of the MFI : Is it to reach the maximum of the poor, or to achieve sustainability and financial performance ? The framework for analyzing the performance of MFIs has become a very broad field thanks to the remarkable growth experienced by the microfinance sector. In this work we chose the case of the MENA region. To be done we have to apply the DEA method. The study shows that the efficiency of the MFIs studied varies according to their legal status.
    Keywords: microfinance, performance, méthode DEA.
    JEL: G21 P27 P31
    Date: 2019–04–10

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