nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2019‒10‒21
nine papers chosen by
Paul Makdissi
Université d’Ottawa

  1. The future of GGC defense with NATO or as Arab NATO? By Vivien Exartier
  2. The Importance of Defense Industry in Turkish Economy By Alper SÖNMEZ
  3. The determiants of non-performing loans: Do institutions matter? A comparative analysis of the MENA and CEE countries By RACHID, RACHID,Semia
  4. An institutional comparison of private shareholding in the central banks of South Africa and Turkey By Jannie Rossouw
  5. Exchange Rate Sensitivity of Firm Value : Recent Evidence from Non-Financial Firms Listed on Borsa Istanbul By Ibrahim Ethem Guney; Abdullah Kazdal; Doruk Kucuksarac; Muhammed Hasan Yilmaz
  6. Functional income distribution, capacity utilization, capital accumulation and productivity growth in Turkey: A post-Kaleckian analysis By Kurt, Ozan Ekin
  7. A Separation: The Economics behind the Administrative Area Modifications in Iran By Einian, Majid
  8. Tourisme à Marrakech; Impacts économiques, socioculturels et environnementaux éminents By Hicham Saddou
  9. TL Deger Kaybi Karsisinda Ihracatin Karliligi By Ufuk Demiroglu

  1. By: Vivien Exartier (Royal University for Women)
    Abstract: The Gulf represents a sub-region of the greater Middle Eastern regional system with its own security and political practices and challenges. Within the Gulf Cooperation Council established in 1981, there exists general agreement on the types of current challenges that need to be confronted but there has never been clear consensus as to the type of strategies and policy tools that could be applied to begin to tackle them. Recent crises on the doorsteps of the Gulf region (Yemen, Syria) however pushed the GCC to be more aggressive in its response by sending financial aid or getting involved militarily. The region does need a security structure but needs to decide which route to follow.The first option is the European Union Security and Defense Policy as a model. The EU advanced its foreign policy agenda using its soft power and thrived at spreading prerogatives and expertise in areas such as conflict management and peace-building while slowly integrating its defence capabilities. The second option is within the framework of NATO since the US has had a military presence in the region and has had close relationships with member states. In terms of US security strategy, the stability of the Gulf is a critical just like Europe. NATO and four of the GCC members (The UAE, Kuwait, Bahrain and Qatar) already members of the Istanbul Co-operation Initiative, which started in 2004 (Saudi Arabia and Oman have been invited but have not agreed yet.)The framework provides the members advice on defense transformation, defense budgeting, defense planning and civil-military relations, military-to-military cooperation to contribute to interoperability through participation in selected military exercises and related education and training activities that could improve the ability of participating countries' forces to operate with those of the Alliance. The third option would be its own structure including states beyond the GCC such as Egypt and Jordan: that is the idea of an Arab NATO or The Middle East Strategic Alliance (MESA) conceived to meet U.S. needs?to target Iran and to reduce U.S. regional presence without allowing China or Russia to gain influence?while disregarding the priorities, and constraints of prospective Arab member states. In reality, GCC buy weapons from Europe, China, Russia. China just established a military base in Djibouti.So the question is what should the GCC security architecture look like? ESDP and NATO had both a common purpose. The purpose of an Arab security structure is not so clear. For example, not all Arab states make Iran as a priority issue. The structure should promote the members interest and not just a major one and external powers. MESA is criticized for serving mainly US and Saudi interests. Another issue is whether to start an alliance or to improve an existing structure: the GCC already has interoperability in place and NATO has created the Istanbul Cooperation Initiative.The paper will look into those three options for the GCC: improving the exiting GCC framework for security, strengthening the relationship with NATO or creating a body including non GCC members.
    Keywords: GCC, NATO, CSDP, defense integration
    Date: 2019–10
    Abstract: This study analyzes the extent of economic importance of defense industry in Turkey by using SIPRI database for the period 1953 through 2018. For this purpose, firstly, the development pattern of Turkish total military expenditure (in constant 2017 US$) is evaluated over 66 years from 1953 to 2018. Next, the statistics on the military expenditure per capita (1988-2018) is analyzed in order to analyze how a change occurs on the expenditure with increasing population. In order to determine how the defense industry evolved in a developing economy, we also examine the expenditure statistics as a share of Turkish government expenditure (2000-2018 period) and GDP (1960-2018 period). Finally, the position and importance of the Turkish defense industry in the world, and in Europe and Middle East region is revealed when compared to other 173 countries. Main findings of the study could be summarized in the following way. The statistics reveal that the industry ranks 14th in the world and 6th in Europe, with a total expenditure of US$ 22B in 2018. Among top 100 arms-producing companies in the world, there are two Turkish companies, ASELSAN and Turkish Aerospace Industries, ranked as 61st and 70th in 2017, respectively. Although it is seen an increasing trend in the expenditures over 1960-2018 period, its share in GDP continuously falls over the same period, and reached to 2.5% in 2018. As the expenditures as a share of GDP, the industry ranks 27th in the world and 5th in Europe in 2018. When we examine per capita expenditures, it is seen an increasing trend over 1988-2018 period, and we see that there is five times increase from $50 in 1988 to $250 in 2010, and the industry ranks 46th in world with $232 per capita expenditure in 2018. When we analyze the share of expenditures in Turkish government spending over 2000-2018 period, it is found that the average is around 7% for 19 years, with the lowest 5.5% in 2015 and the highest 9.2% in 2000. As a share of government spending, there is a rapid downward trend in the expenditures from 2000 to 2015, this corresponds to 40% decrease, but this process is reversing after 2016, and reached to 7.1% in 2018.
    Keywords: Arms Industry, Defense Industry, Military Expenditures, Turkey
    JEL: H50 L00 L60
    Date: 2019–10
  3. By: RACHID, RACHID,Semia
    Abstract: This paper tries to study the determinants of non-performing loans (NPL) in the Middle East and North Africa (MENA) and Central and Eastern European (CEE) countries during the 1997/2016 period. Our analysis, which is based on different panel data estimation approaches, shows that institutions have different effects on the level of NPL in the MENA and the CEE countries. We found that institutions (rule of law) increase the level of NPL in the MENA countries but they decrease these loans in the CEE countries. This result is attributed to the existence of an institutional difference between both samples of countries. In fact, the rise of NPL in the CEE countries is attributed to financial development. On the other hand, the global financial crisis (GFC) has an important effect on the accumulation of NPL in the MENA countries. However, the relationship between the GFC and the NPL is not significant for the CEE countries.
    Keywords: Non-performing loans. Institutional quality. GMM estimator. Comparative analysis
    JEL: G2 G21
    Date: 2019
  4. By: Jannie Rossouw
    Abstract: This paper assesses institutional aspects of private shareholding in the central banks of South Africa and Turkey. It is shown that only a small number of central banks other than the SA Reserve Bank (SARB) in South Africa and Türkiye Cumhuriyet Merkez Bankasi (TCMB) in Turkey have any form of private shareholding, although South Africa and Turkey and the only two emerging-market countries with central banks with private shareholding.
    Date: 2018–07
  5. By: Ibrahim Ethem Guney; Abdullah Kazdal; Doruk Kucuksarac; Muhammed Hasan Yilmaz
    Abstract: [EN] This study attempts to quantify the effect of exchange rate on the value of non-financial firms listed on Borsa Istanbul. In the first part of the analysis, the regression results using firm-level data show that currency fluctuations tend to influence the stock returns of 44 firms out of 177 firms in the sample in a significant way with negative average foreign exchange (FX) sensitivity coefficient. The sectoral-level analysis indicates that sectors with net FX short position are also subject to higher FX sensitivity with respect to firm value. In the second part, firm-level determinants of FX sensitivity are investigated using quantile regression method. The estimation results indicate that the market value of firms with net FX position surplus tends to respond positively to the depreciation of Turkish lira against the United States (US) dollar across all quantiles. This finding stresses the importance of risk management activities for non-financial firms in terms of shielding themselves from FX risk. It is also observed that the degree of internationalization, firm size, profitability and growth opportunities are significant determinants of stock market pricing of FX risk. [TR] Bu calisma Borsa Istanbul'da islem goren finansal olmayan firmalarda doviz kurunun firma degeri uzerindeki etkisini olcmeyi amaclamaktadir. Analizin ilk asamasinda firma duzeyinde veri kullanilarak yapilan regresyon sonuclari kurdaki dalgalanmalarin orneklemi olusturan 177 firmadan 44'unun hisse senedi getirisini onemli duzeyde etkiledigini ve ortalama hassasiyet katsayisinin negatif oldugunu gostermektedir. Sektorel duzeyde gerceklestirilen analizler, yabanci para (YP) acik pozisyonunun yuksek oldugu sektorlerde firma degerinin kura hassasiyetinin daha yuksek olduguna isaret etmektedir. Ikinci asamada firma duzeyindeki kur hassasiyeti belirleyicileri kantil regresyon yontemiyle incelenmektedir. Tahmin sonuclari net YP pozisyon fazlasi tasiyan firmalarin piyasa degerinin Turk lirasindaki deger kayiplarina pozitif tepki verdigini ortaya koymaktadir. Bu bulgu, finansal olmayan firmalar icin risk yonetimi faaliyetlerinin olumsuz doviz kuru hareketlerinden korunma acisindan onemini gostermektedir. Ayrica, uluslararasilasma derecesi, firma buyuklugu, karlilik ve buyume potansiyellerinin hisse senedi piyasasinda kur riski fiyatlamasinin onemli belirleyicileri oldugu gozlenmektedir.
    Date: 2019
  6. By: Kurt, Ozan Ekin
    Abstract: The aim of this article is to examine the relation between functional income distribution, capacity utilization, capital accumulation and productivity in Turkey by identifying demand and overall regimes prevalent in the economy. For that purpose, we conduct an empirical analysis using different specifications of the post-Kaleckian model of Hein and Tarassow (2010). Depending on the specification employed, empirical findings point at two types of demand and overall regimes that might be prevailing in Turkey. In case of an intermediate demand regime along with a type of intermediate overall regime, pro-labor policies lead to an increase in the rates of capacity utilization and productivity growth, but a decline in the rate of accumulation. However, if a profit-led demand regime accompanied with an expansive overall regime rules, these policies are expected to lead to a fall in all these three variables. The findings show that, independent of specification, a higher profit share has a positive impact on the rate of accumulation; however, the effects on the rates of capacity utilization and productivity growth vary in sign and magnitude, though the latter are less than unity in absolute value. The article contributes to the literature by being the first study that simultaneously identifies demand and overall regimes of an economy.
    Keywords: Functional income distribution,growth,post-Keynesian economics,Turkey
    Date: 2019
  7. By: Einian, Majid
    Abstract: Once in a few years, we witness a new ostan (province) being born out of older ostans in Iran. The number of shahrestans has gone from 316 in 2003 to 429 in 2013. There seems to be an everlasting desire for lower levels of administrative areas to separate and form a new higher level area. Shahrestans want to become ostans, and bakhshs want to become shahrestans. This paper studies the economic effects of becoming a new ostan by looking at the consumption of households. Results show a significant positive effect on the growth of consumption in the separation year or the following year. Becoming the central Shahrestan of the new Ostan does not show positive effects on consumption growth.
    Keywords: Administrative Areas, Cohort Pseudo Panel, Household Consumption
    JEL: C21 C23 D73 D74 R11 R23
    Date: 2019–01
  8. By: Hicham Saddou (UCA - Université Cadi Ayyad [Marrakech])
    Abstract: In Morocco, as elsewhere, tourist activity is an effective agent of conflict throughout the territory, even if the pressure varies from place to place. More and more invasive, its presence is manifested by a bulimic consumption of natural and agricultural spaces, but also by imbalances engendered on pre-existing economic activities and by the social, professional and cultural changes of the local population.
    Abstract: Au Maroc comme partout ailleurs, l'activité touristique est un agent conflictuel efficace sur l'ensemble du territoire, même si la pression varie selon les lieux. De plus en plus envahissante, sa présence se manifeste par une consommation boulimique d'espaces naturels et agricoles, mais aussi par des déséquilibres engendrés sur les activités économiques préexistantes et par les mutations sociales, professionnelles et culturelles de la population locale. Mots clés : tourisme, Marrakech, impacts socio-économique, environnement.
    Keywords: tourism,Marrakech,impacts,environment,socio-economic
    Date: 2019–08–01
  9. By: Ufuk Demiroglu
    Abstract: [EN] Views that Turkish Lira (TRY) depreciations may not produce much improvement in the trade deficit appear regularly in economic commentaries, such as the view that the Marshall-Lerner condition may not be satisfied in Turkey. A recent view that reaches the same conclusion is that customers abroad may be forcing Turkish producers to lower their foreign currency prices in response to TRY depreciations, limiting the positive impact of TRY depreciations on Turkish exports. This study examines the validity of those views for the case of the rapid TRY depreciation of recent years in light of recent research on Turkish pass-through and firm profitability. Those views do not appear to be valid. Increases in the TRY value of foreign currencies are reflected nearly fully in Turkish export prices measured in TRY. In contrast, production costs (measured in TRY) rise much less rapidly than the exchange rates because of the domestic value-added component of production. Consequently, rising exchange rates raises profitability of Turkish exports, in absolute terms for the ongoing export activity as well as in relative terms for new exports relative to new domestic sales. That conclusion does not change when imported inputs are taken into account. [TR] Kur artislarinin dis ticaret dengesine cok olumlu bir etki yapmayabilecegine dair bazi gorus ve yorumlarla siklikla karsilasilmaktadir. Ornegin, Marshall-Lerner kosulunun saglanmasi gerektigi aksi takdirde dis ticaret dengesini duzeltici etkisinin kesin olmadigi, veya yabanci musterilerin Turk ihracatcilara fiyat dusurttugu ve bunun ihracat artisini yavaslattigi seklinde gorusler dile getirilmektedir. Bu calisma anilan gorusleri guncel calismalar isiginda ve son yillardaki kur degisimi ozelinde incelemekte ve soz konusu goruslerden farkli bir yargiya varmaktadir. Calismanin ana odagi kur hareketlerinin ihracat karliligina etkisidir. Turkiye’de kur artislari buyuk oranda TL cinsi ihracat fiyatlarina artis olarak yansirken, uretim maliyetleri (yurt ici katma deger kismi nedeniyle) kurlardan cok daha yavas artmaktadir. Dolayisiyla kur artislari ihracatin karliligini (hem suregelen ihracat icin hem de yeni uretimde yurt ici satislara goreli olarak) guclu sekilde artirmaktadir. Ithal girdiler hesaba katildiginda da bu sonuc degismemektedir.
    Date: 2019

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