nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2020‒03‒16
fifteen papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Impact of Fiscal Policy on Inequality and Poverty in the Arab Republic of Egypt By Lara Ibarra,Gabriel; Sinha,Nistha; Fayez,Rana Nayer Safwat; Jellema,Jon Robbert
  2. Does School Safety and Classroom Disciplinary Climate Hinder Learning ? Evidence from the MENA Region By Cahu,Paul Marie Michel; Quota,Manal Bakur N
  3. From Currency Depreciation to Trade Reform : How to Take Egyptian Exports to New Levels? By Youssef,Hoda; Zaki,Chahir
  4. Water shortages are a global challenge, with one third of the world’s population still without access to clean water. Gulf Cooperation Council (GCC) countries face a scarcity of water resources due to their dry climates. The United Arab Emirates’ (UAE’s) renewable water resources are below the United Nations’ water scarcity threshold, and its water usage far exceeds the natural recharge rate by as much as 26-fold. This study investigates the water-agriculture nexus in the emirate of Abu Dhabi and provides policy options for reducing water use in the agriculture sector to sustainable levels. By Noura Mansouri; David Wogan; Humaid Kanji
  5. Returns to Investment in Education : The Case of Turkey By Patrinos,Harry Anthony; Psacharopoulos,George; Tansel,Aysit
  6. Learning from Power Sector Reform : The Case of the Arab Republic of Egypt By Rana,Anshul; Khanna,Ashish
  7. How Mass Immigration Affects Countries with Weak Economic Institutions : A Natural Experiment in Jordan By Nowrasteh,Alex; Forrester,Andrew C.; Blondin,Cole
  8. Policy and Economic Frameworks to Deepen Sino-Saudi Cooperation By KAPSARC, King Abdullah Petroleum Studies and Research Center
  9. Assessing the financial sustainability of parametric pension system reforms: The case of Morocco By EL-HOUJJAJI, Hind; ECHAOUI, Abdellah
  10. Air Pollution and Internal Migration: Evidence from Iranian Household Survey By Hassan F. Gholipour; Mohammad Reza Farzanegan; Mostafa Javadian
  11. Behavioral Aspects of Energy Transition: A KAPSARC-Energy Systems Catapult (ESC) Joint Methodological Report By Emre Hatipoglu; Thamir Alshehri; Matt Lipson; Scott Milne; Simon Pearson
  12. Socio-Economic Determinants of Child Marriage: Evidence from the Iranian Provinces By Mozhgan Asna-ashary; Mohammad Reza Farzanegan; Mehdi Feizi; Hassan F. Gholipour
  13. The Opportunity Cost of Domestic Oil Consumption for an Oil Exporter: Illustration for Saudi Arabia By Fatih Karanfil; Axel Pierru
  14. Stock Return and Risk Premium: Evidence from Turkey By Tursoy, Turgut; Berk, Niyazi
  15. Compte capital et développement financier en Tunisie : Causalité et relation de long terme By Mohamed Gritli; Serge Rey

  1. By: Lara Ibarra,Gabriel; Sinha,Nistha; Fayez,Rana Nayer Safwat; Jellema,Jon Robbert
    Abstract: This study assesses the redistributive impact of fiscal policy ?? including expenditures and taxation ?? in the Arab Republic of Egypt. Using a broadly applied methodology, a fiscal incidence analysis is conducted using survey and government data for fiscal year 2015. Evidence shows that Egyptian fiscal policy reduces income inequality, and that among individual fiscal programs, the largest reduction is due to public expenditures on the primary education system. Compared with similar countries, Egypt's overall fiscal policy placed it in the median of the distribution of inequality reduction. Fiscal policies in Egypt also led to a decrease in poverty, mostly from the flagship Tamween program. Poverty and inequality could be reduced more effectively if the country would shift away from spending on untargeted energy subsidies to more targeted transfers. The large gap between the government's expenditures and revenues helps explain the positive outcomes on poverty and inequality but poses challenges in the long term.
    Date: 2019–04–18
  2. By: Cahu,Paul Marie Michel; Quota,Manal Bakur N
    Abstract: School safety and classroom disciplinary climate have a direct impact on teachers'ability to teach and students'ability to learn. School safety and classroom disciplinary climates have been declining in the Middle East and North Africa region, as is demonstrated in this paper using data from the Trends in Mathematics and Science Study and the Progress in International Reading Literacy Study. The paper then moves on to untangle how disruptive learning environments can have negative impacts on student learning outcomes. Thus, the objective of the paper is to analyze the determinants associated with disrupted learning environments, at the school and classroom levels, in the Middle East and North Africa region and to uncover the impacts these environments have on student learning outcomes. This information will provide policy makers with evidence on disrupted learning environments while offering some recommendations on how these conditions can be improved.
    Date: 2019–04–17
  3. By: Youssef,Hoda; Zaki,Chahir
    Abstract: The Arab Republic of Egypt is yet to meet its exports potential, which has been historically hampered by several domestic market distortions and multiple barriers, resulting in weak export performance and modest regional and global integration. Although the liberalization of the exchange rate in November 2016 was a necessary step to correct the exchange rate misalignment and ease the ensuing shortages in foreign currency, it has not been sufficient to guarantee a notable improvement in export performance. This paper analyzes Egypt's exports along three dimensions that are key for export performance and future growth: (i) composition and relatedness of exported products; (ii) geographic and product concentration; and (iii) relatedness to globally traded products. The analysis suggests that Egypt continues to specialize in traditional areas of comparative advantage and limited value-added or is expanding toward products for which global demand is declining. The paper uses a gravity model to predict bilateral trade flows based on the economic size, geographic distance, and other relevant characteristics that should typically contribute to facilitated trade and identify specific sectors and markets for which Egypt seems to have an untapped potential. To understand this underperformance, the paper investigates the key impediments to meeting the export potential. It explores some of the important supply and demand side factors and assesses the role of trade policy measures (tariffs and non-tariffs barriers) in impeding export growth. The analysis reveals that despite significant liberalization efforts, Egypt remains among the group of developing countries that have the highest frequency index and coverage ratio of non-tariff measures. Policy recommendations include a call to improve external competitiveness by fostering and diversifying domestic production and complement these efforts by engaging in trade facilitation reforms to remove the non-tariffs barriers to trade, notably, the administrative, technical, and sanitary barriers to trade. These are all necessary for the country to capitalize on its competitive gains from the currency depreciation and to improve the degree of Egypt's integration into global markets.
    Date: 2019–04–09
  4. By: Noura Mansouri; David Wogan; Humaid Kanji (King Abdullah Petroleum Studies and Research Center)
    Keywords: Gulf Cooperation Council (GCC), Sustainable Agriculture, Water Scarcity
    Date: 2020–03–09
  5. By: Patrinos,Harry Anthony; Psacharopoulos,George; Tansel,Aysit
    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.
    Date: 2019–03–21
  6. By: Rana,Anshul; Khanna,Ashish
    Abstract: The challenge of power sector reform in the Arab Republic of Egypt has long been dominated by extremely high subsidies, with prices set well below the costs of supply. These subsidies have taken a variety of forms: explicit subsidies in the government budget, implicit subsidies in the underpricing of fuel supply (particularly natural gas) to the power sector, accumulation of arrears from the sector, poorly-maintained physical capital, and cross-subsidies across customer classes. Egypt's social contract was linked to expanding energy access with good quality supply based on public financing and huge subsidies. Egypt has been able to achieve universal access with more or less reliable power over the entire period, except when chronic underinvestment in the sector caused blackouts in 2011?14 at time of severe political uncertainty. The social compact came under pressure in 2014 when energy subsidies reached 6.8 percent of gross domestic product. Since then, the reform process has been revived based on new electricity, gas, and renewable energy laws; price and subsidy adjustments; structural reforms with a deliberately long time frame; and greater emphasis on the role of the private sector.
    Date: 2020–02–25
  7. By: Nowrasteh,Alex; Forrester,Andrew C.; Blondin,Cole
    Abstract: To what extent does immigration affect the economic institutions in destination countries? While there is much evidence that economic institutions in developed nations are either unaffected or improved after immigration, there is little evidence of how immigration affects the economic institutions of developing countries that typically have weaker institutions. Using the Synthetic Control Method, this study estimates a significant and long-lasting positive effect on Jordanian economic institutions from the surge of refugees from the First Gulf War. The surge of refugees to Jordan in 1990?1991 was massive and equal to 10 percent of Jordan's population in 1990. Importantly, these refugees were able to have a large and direct impact on Jordanian economic institutions because they could work, live, and vote immediately upon entry due to a quirk in Jordanian law. The refugee surge was the main mechanism by which Jordan's economic institutions improved in the decades that followed.
    Keywords: International Migration,Migration and Development,Human Migrations&Resettlements,Armed Conflict,International Trade and Trade Rules,Youth and Governance,National Governance,Social Analysis,Quality of Life&Leisure,Government Policies,Public Sector Administrative and Civil Service Reform,Democratic Government,Public Sector Administrative&Civil Service Reform,State Owned Enterprise Reform,Energy Privatization,De Facto Governments,Privatization,Economics and Finance of Public Institution Development
    Date: 2019–04–11
  8. By: KAPSARC, King Abdullah Petroleum Studies and Research Center (King Abdullah Petroleum Studies and Research Center)
    Abstract: The Belt and Road Initiative (BRI) has expanded from 65 original member states during its official launch in 2015 to 131 as of April 2019. The countries of the Middle East and North Africa have generally welcomed the initiative and its goal of improving regional connectivity. However, each economy has a different capacity to benefit from the BRI, depending on its size, structure, level of development, and various idiosyncratic features. These characteristics, in turn, shape BRI investments and programs for each host country and their related bilateral (and multilateral) engagement with China, such as the creation of joint action plans, the adjustment of governance structures, and the development of institutional capacity and policy frameworks.
    Keywords: China Belt and Road Inititiative (BRI), Green Power Investment, Petrochemical Integration
    Date: 2019–03–09
  9. By: EL-HOUJJAJI, Hind; ECHAOUI, Abdellah
    Abstract: In 2015, the government adopted a parametric reform intended to deal with the critical financial situation of the CMR civilian pension regime. In this paper, we examine the robustness of this parametric reform by using the Cohort-Component population projection model to the fund’s population during the period 2014-2064. First, we divide the population of the baseline year into cohorts classified by age and sex and then we project the year-on-year demographic transition of each cohort. Second, we lead a projection of the financial situation related to the 2015 parametric reform. Moreover, we project the status quo situation and an alternative scenario where we propose to increase solely the retirement age, and then compare the results with those of the 2015 parametric reform. Our results show that, for the three scenarios, a parametric reform will have a limited effect on the financial situation, in both the long and the short-terms. Under a status quo situation, the reserves are expected to run out in 2023, while under the current parametric reform and our proposed reform, they are expected to expire in 2033. Furthermore, our alternative scenario seems to have some more advantages so that it doesn’t reduce the rights of beneficiaries.
    Keywords: PAYG pension scheme; parametric reform; CMR pension scheme;social policy; retirement; Morocco
    JEL: H55 J11 J26
    Date: 2020–03–03
  10. By: Hassan F. Gholipour; Mohammad Reza Farzanegan; Mostafa Javadian
    Abstract: The purpose of this study is to examine the impact of air pollution (measured by satellite data of Aerosol Optical Depth (AOD)) on net outmigration. Using data from the 2011 and 2016 National Population and Housing Censuses for 31 provinces of Iran and applying a panel fixed effects estimation method, our results show that AOD has a positive and significant impact on net outmigration. We also find that higher levels of economic activities in provinces discourage outmigration.
    Keywords: air pollution, migration, Iran
    JEL: Q53 R23
    Date: 2020
  11. By: Emre Hatipoglu; Thamir Alshehri; Matt Lipson; Scott Milne; Simon Pearson (King Abdullah Petroleum Studies and Research Center)
    Abstract: KAPSARC’s work on innovation in electricity transitions has focused on unbundling services in the electricity sector (KAPSARC 2016) and developing the microeconomic foundation for a reliability service. Our research has investigated the experiences of industries resembling the electric power sector and those involved in the sharing economy that have recently faced technological disruptions. In Fuentes (2016), we argued that reallocating risk across the electricity market, and the apparent paradox between (spare) capacity and price signals (scarcity) could open up a new role for incumbent electricity firms.
    Keywords: Saudi Arabia, Economic Modeling, Saudi Vision 2030
    Date: 2020–03–11
  12. By: Mozhgan Asna-ashary; Mohammad Reza Farzanegan; Mehdi Feizi; Hassan F. Gholipour
    Abstract: We study the socio-economic determinants of child (girls below age of 19 years) marriage using a panel data of thirty Iranian provinces from 2007 to 2015. Our panel fixed effects and generalized method of moments (GMM) estimations show that the level of income per capita (with negative effect), inflation and income inequality (both with positive effect) are the significant determinants of child marriage. Our results which control for province fixed effects (e.g. local cultural norms or geographical conditions) do not show a significant effect of religiosity captured by a household’s spending on religious products and services. To reduce child marriage, which has long-run negative effects on the development of children, policymakers need to focus on economic issues and distribution of income, thus reducing the economic incentives or necessities of families to accept the practice of child marriage. Child marriage is more rooted in economic deprivation than in religiosity of households.
    Keywords: child marriage, Iran, poverty, panel regression
    JEL: J12 J13 P46
    Date: 2020
  13. By: Fatih Karanfil; Axel Pierru (King Abdullah Petroleum Studies and Research Center)
    Abstract: When appraising investment projects from a public perspective, a barrel of oil displaced from or added to domestic consumption has to be valued at its opportunity cost. This paper develops a partial-equilibrium framework to assess the opportunity cost of domestic oil consumption for an oil-exporting country. The framework takes into account that (i) the usual ‘small economy’ assumption does not necessarily hold, (ii) the domestic oil price can be set either at a fixed level or as a function of the international price, and (iii) oil production, level of exports, or domestic consumption can be constrained. We derive the opportunity cost for each case considered and a formula quantifying the net welfare gains from reforming the domestic oil price
    Keywords: Dometic Pricing, Oil, Opportunity Cost, Shadow Price, Saudi Arabia
    Date: 2020–03–01
  14. By: Tursoy, Turgut; Berk, Niyazi
    Abstract: The finance theory suggests that there might be a relationship between the stock return and the risk premium. Theoretically, stock return defined as the change of the market price, and it is related to the scope of the financial system, which is consisting of the financial institution and financial markets. The way, possibly will be, to contribute the existing literature is to propose a new measurement and this study try to do so. The aim of this study and its motivation is that investigates a new measure of stock return and attempt to establish a new relationship between return and risk premium. To realize this aim, this study uses geometric mean to calculate return and standard deviation, and after all, construct panel data analysis to analyze the return and standard deviation relationship. In this study, seven commercial banks’ data analyzed to the relationship between return and standard deviation with panel data analyses between 1991 and 2010. Also, the geometric mean and value relative concept used to estimate return and the monthly stock prices to yearly basis.
    Keywords: Asset Pricing, Stock Return, Risk
    JEL: G11 G12 G21
    Date: 2020–03–01
  15. By: Mohamed Gritli (Faculté des Sciences Economiques et de Gestion de Tunis - UTM - Université Tunis El Manar, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Serge Rey (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)
    Abstract: Much research has focused on the relationship between financial development and growth, on the one hand, and the relationship between financial integration and economic development, on the other. However, the link between capital account liberalization and financial development remains limited, particularly for the Middle East and North African countries. The purpose of this article is to propose an empirical analysis of this relationship in the case of Tunisia, a country that has chosen for several decades to gradually open up to foreign capital. The econometric study carried out over the period 1986-2014 using a Toda-Yamamoto long-term causality model in conjunction with an ARDL model showed that the capital account openness did indeed have a positive effect on long-term financial development. This result is robust to several specifications of the autoregressive model and to alternative measures of financial development. Nevertheless, the short-term impact of the capital account openness is more limited, especially when considering the effects on the stock market.
    Abstract: De nombreuses recherches se sont focalisées sur la relation entre le développement financier et la croissance, d'une part, et sur la relation entre l'intégration financière et le développement économique, d'autre part. Cependant, l'étude du lien entre libéralisation du compte capital et développement financier reste encore limitée, et en particulier pour les pays du Moyen Orient et d'Afrique du Nord. L'objet de cet article est de proposer une analyse empirique de cette relation dans le cas de la Tunisie, pays qui a fait le choix depuis plusieurs décennies de s'ouvrir progressivement aux capitaux étrangers. L'étude économétrique menée sur la période 1986-2014 en utilisant conjointement un modèle de causalité de long terme Toda-Yamamoto et un modèle ARDL a permis de montrer que l'ouverture du compte capital avait bien un effet positif sur le développement financier en longue période. Ce résultat est robuste à plusieurs spécifications du modèle autorégressif et à des mesures alternatives du développement financier. Néanmoins, l'impact de court terme de l'ouverture du compte capital est plus limité, en particulier lorsqu'on considère les effets sur le marché boursier.
    Keywords: Tunisia,ARDL,causality,financial development,capital account,causalité,modèle ARDL,Tunisie,développement financier,compte capital
    Date: 2020

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