nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2021‒10‒04
ten papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Tunisian democracy 10 years after the revolution: A tale of two experiences By Chomiak, Laryssa
  2. Focussing European cooperation with the Middle East and North Africa on social contracts By Furness, Mark; Loewe, Markus
  3. Labor Market Nationalization Policies and Exporting Firm Outcomes: Evidence from Saudi Arabia By Patricia Cortés; Semiray Kasoolu; Carolina Pan
  4. Post-Compulsory Schooling of Youth in Turkey during the Great Recession: A Case of Pro-cyclical Enrollment By Murat Demirci; Meltem Poyraz
  5. Financial Stress and Effect on Real Economy: The Turkish Experience By Yildirim, Yusuf; Sanyal, Anirban
  6. Oman: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Oman By International Monetary Fund
  7. Jordan Symmetry Reduction for conic Optimization over the doubly nonnegative Cone: Theory and Software By Brosch, Daniel; de Klerk, Etienne
  8. Gender separation and academic achievement in higher education: Evidence from a natural experiment in Iran By Kamal, Zahra
  9. Le contrat social: Un nouveau concept pour la coopération avec les pays de la région MENA touchés par des conflits By Furness, Mark; Houdret, Annabelle
  10. Entwicklungszusammenarbeit im Nahen Osten und in Nordafrika: Auch in konfliktbetroffenen Ländern neue Gesellschaftsverträge unterstützen By Furness, Mark; Houdret, Annabelle

  1. By: Chomiak, Laryssa
    Abstract: At the 10-year anniversary of the Tunisian Revolution, which toppled decades of dictatorship and repositioned discussions about democracy across the Middle East and North Africa, the democratic transition in Tunisia is in flux, or rather at an impasse. On the one hand, Tunisia is celebrated as the lone democratic success story of the 2011 Arab Uprisings, based on multiple cycles of free and fair elections. On the other hand, serious domestic political agitation over the last decade, coupled with deep structural inequalities and a rise in public perceptions of corruption in government, has nearly derailed its course towards democratic consolidation and stability. Democratisation in Tunisia has hinged on the widely celebrated mechanism of consensus among political adversaries in parliament, and among key political and civil society actors. Yet, instead of achieving consensus on critical political and economic-structural reforms, compromise-based arrangements have fallen apart due to intense party infighting, regular resignations of governments, and enormous public pressure resulting from a stagnating economy and lack of vision for comprehensive and equitable economic reform. The effect has been sustained infighting over economic and social policy, which in turn has resulted in diminishing public trust in political parties and new democratic institutions, an all-time low level of satisfaction with the government's performance and a significant rise in contentious politics, particularly between 2019 and 2021. The proliferation of micro-parties (209 registered political parties for a population of 11.8 million) has resulted in confusion among the electorate, while the economic reality of a suffocating international debt crisis, which has only been exacerbated by the COVID-19 pandemic, has rendered levels of public trust in government to an all-time low. At this pivotal moment, Tunisia needs a clear political plan that encompasses a framework for productive political competition and a sound economic vision. To enter into the phase of democratic consolidation - defined as the moment of political, economic and societal stability when authoritarian rule begins to diminish - Tunisian elected authorities and the international community must address rising public demands, which emanate from across all socio-economic classes, for wealth redistribution and sound fiscal policy reform. More effective and transparent public spending will alleviate issues of public trust in all aspects of governance. Reconstructing trust in new democratic institutions is key and also requires a concerted effort to build democracy from the bottom up, particularly in marginal and impoverished areas where socio-economic ills are deeply entrenched, and where political contention is rampant and highest.
    Date: 2021
  2. By: Furness, Mark; Loewe, Markus
    Abstract: 2021 is proving to be a key year for cooperation between Europe and its neighbours in the Middle East and North Africa (MENA) region. As the European Union (EU) launches its new multiannual budget, the COVID-19 pandemic has demanded a rethink of the political, economic and social priorities that the EU and its member states should pursue with MENA countries. Europe's potential for positive influence on state-society relations in MENA countries has yet to be realised. The latest European Neighbourhood Policy (ENP) South Communication, published in February 2021, promises a 'new agenda' for cooperation with MENA countries. It does not, however, address conflicts between its own objectives, especially between liberal-democratic political and economic reforms, accountable government and respect for human rights on the one hand, and restrictive trade practices, migration management and security cooperation on the other. Furthermore, there is little bilateral policy coordination among EU member states. Focussing cooperation on social contracts would help overcome such conflicts, which are inherent in cooperation targeting short- to medium-term goals, such as migration management, resilience and private investment. In authoritarian contexts, these measures tend to strengthen the state at the expense of society, and thereby increase prospects for conflict, rather than the stability they promise. The social contract perspective is long-term. Social contracts rely on the state's delivery of the "3 Ps": protection (of citizens), provision (of economic and social services) and participation (in decision-making). The social contract provides an analytical tool and a set of organising principles for joint EU and member state priorities and activities. The social contract lens shows how the 3 Ps work together as a framework for social cohesion, peaceful relations and political stability. In practical terms, its use would help improve the effectiveness, coherence and coordination of EU and member state cooperation with MENA countries. Some EU member states prefer to focus on trade and economic cooperation, some on political reform and human rights, and others on migration management. If all take a more long-term perspective, they will realise that sustainable social contracts in MENA countries are good for all of their aims. All European actions should support reforms in MENA countries that aim to make social contracts more acceptable to the contracting parties - governments and social groups. Ideally, such reforms result from negotiations of social contracts between parties on equal terms. In practice, however, the negotiation power of social groups is often limited - one reason why Europe should ensure that its programmes strengthen societies at least as much as governments. This paper discusses four key cooperation areas which are potential drivers of change for social contracts: Conflict resolution, peacebuilding and reconstruction; Post-COVID-19 recovery: health and social protection; Participation at local, regional and national levels; and Mutually beneficial migration and mobility. The EU and its member states, by working together on the 3 Ps in these four areas, can influence positive change in the MENA region.
    Date: 2021
  3. By: Patricia Cortés; Semiray Kasoolu; Carolina Pan
    Abstract: In the last decade, Gulf countries have imposed hiring quotas to promote the participation of natives in the private sector and address high levels of unemployment, particularly among women and the youth. This paper explores how one such policy, Nitaqat in Saudi Arabia, affected the outcomes of exporting firms, the most productive sector of the non-oil economy. We find that whereas the policy was successful in increasing the employment of Saudi nationals by these firms, it came at a high cost. In the year following the announcement of the policy, relative to firms above the quota, firms below the quota were 1.5 percentage points more likely to exit the market, 7 percentage points less likely to export, and conditional on exporting, the value of their exports fell by 14 percent. Additionally, surviving treated firms reduced their labor force by 10 percent. We find that to comply with the policy, firms hired mostly lower-wage, low-skilled Saudis. The policy doubled the share of women in treated firms. Importantly, we find that these short-term effects persisted for at least three years after the policy’s implementation.
    JEL: J21 J61
    Date: 2021–09
  4. By: Murat Demirci (Department of Economics, Koç University); Meltem Poyraz (Department of Economics, Boğaziçi University)
    Abstract: The impact of recessions on school enrollment is ambiguous. On one hand, recessions might increase the likelihood of enrollment due to decreasing opportunity costs of attending school. On the other hand, recessions might discourage enrollment due to reductions households have in funds available for education and deteriorating expectations about returns to education. In this paper, we empirically analyze how local unemployment rates affect enrollment decisions in Turkey during the period covering the Great Recession of 2008-2009. Our estimates show that the likelihood of enrollment in university undergraduate programs decreases during periods of and in regions experiencing higher unemployment, whereas the enrollment in high schools is not affected. This finding contradicts earlier findings of counter-cyclical enrollment in the context of developed countries. This contrast highlights the variations in the relative importance of the effect of income and expectations and in the potential long-term effects of recessions across countries. In particular, recessions might have longer-lasting negative effects in developing countries due to their adverse effect on human capital accumulation.
    Keywords: The Great Recession, School enrollment, Human capital accumulation, Unemployment, Turkey.
    JEL: E24 E32 I20 J24
    Date: 2021–09
  5. By: Yildirim, Yusuf; Sanyal, Anirban
    Abstract: In this paper, we aim to analyze empirically how economic activity reacts to the financial stress shocks depending on the stress regime in Turkey. Using quarterly data, the effect of financial stress is examined using two threshold vector autoregression model (TVAR) for consumption, investment and real GDP by using financial stress index, credit growth and inflation rate as endogenous variables. The paper proposes local projection approach for estimating threshold VAR model as robustness check to overcome the data limitations. The main result of this paper is that the effect of financial stress on consumption, investment, and real GDP, such as magnitude and significance, vary greatly depending on the financial stress regime. The paper finds that financial stress is found to affect economic growth when the stress level is already high. This corroborates with the effectiveness of credit channel in the financial friction mechanism. On the contrary, the financial stress does not affect real economic activities to significantly during low stress regime. The effect of financial stress impairs consumption and investment growth during high stress regime which leads to slow down of economic activities.
    Keywords: Financial stress index, Threshold VAR model, Markov Switching Model, Local Projection, Forecast Error Variance Decomposition
    JEL: C01 C32 G01
    Date: 2021–09–21
  6. By: International Monetary Fund
    Abstract: Sultan Haitham ascended to the throne in January 2020 and has committed to implementing strong fiscal and structural reforms to address longstanding vulnerabilities. In addition to persistent fiscal deficits arising from incomplete adjustment to lower oil prices since 2015, Oman faced twin shocks from the COVID-19 pandemic and a collapse in oil prices in 2020 that amplified fiscal and external vulnerabilities. The authorities moved rapidly to contain the spread of COVID-19 infections and provided broad-based policy measures to limit its impact on the economy. In addition, frontloaded fiscal consolidation has been implemented in the 2021 budget as part of the authorities’ Medium-Term Fiscal Plan (MTFP) which aims to eliminate the fiscal deficit over the medium term. Banks have high capital buffers and liquidity, but credit risk is a concern going forward. Structural reforms have been accelerated under Oman Vision 2040 to boost non-oil private sector growth and facilitate job creation.
    Date: 2021–09–12
  7. By: Brosch, Daniel (Tilburg University, School of Economics and Management); de Klerk, Etienne (Tilburg University, School of Economics and Management)
    Date: 2021
  8. By: Kamal, Zahra
    Abstract: In 2011, a large university in Tehran launched a policy of gender separation at classroom level without publicly announcing it beforehand. The current paper utilizes this natural experiment to identify the causal impact of participation in single-sex versus mixed classrooms on students' achievement. Despite the vast yet inconclusive literature on single-sex schooling, this paper addresses the dearth of the research in the context of higher education as well as the context of Muslim-majority countries where single-sex education is prevalent. Empirical findings show that when students' characteristics and educational competencies are taken into account, attending a single-sex classroom improves both males' and females' average performances by around 0.36 standard deviation. While the academic benefit for females does not depend on their ability level, the effect is considerably heterogeneous among males with different initial ability. Nearly all positive effect for males is driven by upper-medium-ability male students performing significantly better in all-male classrooms.
    Keywords: education policy,gender separation,single-sex education,coeducation,mixed classroom,higher education
    JEL: I23 I24 I28 J16 C31
    Date: 2021
  9. By: Furness, Mark; Houdret, Annabelle
    Abstract: Près d'une décennie après le 'printemps arabe', les relations entre les États et les sociétés des pays du Moyen-Orient et d'Afrique du Nord (région MENA) sont en pleine évolution. Les soulèvements exprimaient un rejet généralisé des contrats sociaux arabes postindépendance, qui reposaient sur la redistribution des rentes générées par l'exploitation de ressources naturelles, ainsi que d'autres formes de transferts et de subventions, en "contrepartie" de l'acceptation de l'autoritarisme politique et économique. Dans plusieurs cas, des guerres civiles et des conflits soutenus par la communauté internationale, et parfois antérieurs aux soulèvements de 2011, ont provoqué l'implosion des anciens contrats sociaux. Cette rupture étant à l'origine des conflits dans la région, la coopération au développement devrait faire du soutien à l'élaboration de nouveaux contrats sociaux une priorité. L'approche de la "reconstruction post-conflit" néglige souvent le fait que les conflits ne sont pas terminés avec la signature d'un accord de paix, et que la reconstruction des infrastructures et des capacités institutionnelles, et des investissements du secteur privé ne sont pas suffisants pour prévenir un retour de la violence. La "résilience", approche souvent favorisée par la coopération, privilégie fréquemment la stabilité politique, économique, sociale et environnementale, sur une transformation révolutionnaire. Cependant, cette approche a souvent servi à justifier des mesures à court terme destinées à maintenir la position de certains acteurs et systèmes. En se focalisant sur le contrat social, la coopération avec les pays en proie à des conflits pourrait contribuer à lier la consolidation de la paix, la reconstruction et le développement socio-économique et politique sur le long terme et favoriser une stabilité durable. L'utilisation du contrat social comme outil d'analyse permet de mieux identifier les actions à éviter par les bailleurs, mais également les domaines d'action à privilégier après les guerres civiles. Des exemples de la région montrent que les bailleurs peuvent exercer une influence favorable à l'élaboration de nouveaux contrats sociaux en promouvant (a) le dialogue entre les parties prenantes, (b) la gouvernance et les réformes, et (c) l'inclusion socio-économique. En Libye, le dialogue socio-économique a permis de réunir des parties prenantes autour d'une nouvelle vision économique. En Palestine, le Programme de Développement Municipal devra accroître la responsabilisation et l'efficacité des institutions locales. Le Conseil Economique, Social et Environnemental (CESE) du Maroc est quant à lui un mécanisme qui favorise la participation de groupes clés de la société. Ces programmes aident à établir une coopération entre les groupes clés des sociétés concernées. Adaptables à d'autres contextes difficiles, ils visent à consolider les processus de prise de décision et améliorer l'efficacité de mesures spécifiques devant permettre, à terme, de renforcer les relations entre État/société. En soutenant ces types d'activités, les bailleurs pourraient contribuer plus efficacement à une paix durable et à des processus de consolidation de l'État dans les pays de la région touchés par des conflits.
    Date: 2020
  10. By: Furness, Mark; Houdret, Annabelle
    Abstract: Die Beziehungen zwischen den Staaten und Gesellschaften des Nahen Ostens und Nordafrikas (MENA) befinden sich auch fast ein Jahrzehnt nach den Aufständen von 2011 noch im Wandel. Die Revolten drückten eine weit verbreitete Ablehnung der damaligen Gesellschaftsverträge aus. Diese basierten auf der Umverteilung von Renteneinnahmen aus natürlichen Ressourcen, Transfers und Subventionen als 'Entschädigung' für die Duldung einer politisch und wirtschaftlich autoritären Regierungsweise. In verschiedenen Ländern der Region wie im Irak, in Libyen, in Syrien und im Jemen, aber auch in Algerien, im Libanon und in Palästina wurden die alten Gesellschaftsverträge durch Bürgerkriege und international geförderte Kriege zerstört, teilweise auch schon vor den Aufständen von 2011. Erodierte Gesellschaftsverträge haben die Konflikte in der MENA-Region verursacht - die Unterstützung neuer Gesellschaftsverträge - vor allem in den von Konflikten betroffenen Ländern - sollte daher ein zentrales Ziel der Entwicklungszusammenarbeit (EZ) sein. Beim "Wiederaufbau" wird häufig nicht beachtet, dass Konflikte nicht mit Friedensabkommen enden, und dass die betroffenen Gesellschaften zur Vermeidung künftiger Gewalt mehr brauchen, als wieder hergestellte Infrastruktur, Institutionen und Investitionen des Privatsektors. Entwicklungsorganisationen sprechen in diesem Zusammenhang von "Resilienz2, um die politische, wirtschaftliche, soziale und ökologische Stabilität zu fördern, statt eine unkontrollierbare, revolutionäre Transformation zu riskieren. Im Namen der "Resilienz" wurden jedoch häufig nur kurzfristig bestimmte Akteure und Systeme unterstützt. EZ muss mehr leisten als Wiederaufbau und Resilienz, um dem Anspruch langfristiger Stabilität gerecht zu werden. Steht der Gesellschaftsvertrag im Fokus, kann die EZ mit Konfliktstaaten ein wichtiges Bindeglied zwischen Friedenssicherung, Wiederaufbau und längerfristiger sozioökonomischer und politischer Entwicklung sein - und langfristig nachhaltige Stabilität fördern. Die analytische 'Brille' des Gesellschaftsvertrags zeigt, was Geber vermeiden sollten, und verdeutlicht, worauf sich das Engagement in der Übergangszeit nach einem Bürgerkrieg konzentrieren sollte. Beispiele aus der Praxis in der MENA-Region legen nahe, dass Geber neue Gesellschaftsverträge unterstützen können, indem sie sich für (a) Stakeholder-Dialoge, (b) Governance und Reformen sowie (c) sozioökonomische Integration einsetzen. In Libyen hilft der sozioökonomische Dialog, eine wirtschaftliche Zukunftsvision für das Land entwickeln. Das Municipal Development Programme (MDP) in Palästina konzentriert sich auf die Verbesserung der Rechenschaftspflicht und der Leistungserbringung kommunaler Institutionen. Der marokkanische Rat für wirtschaftliche, soziale und Umweltangelegenheiten (CESE) zeigt auf, wie ehemals marginalisierte Gruppen aktiv einbezogen werden können. Diese drei positiven Beispiele zeigen, wie die Zusammenarbeit der gesellschaftlichen Gruppen in den MENA-Ländern gefördert werden kann. Sie verfolgen das Ziel, Entscheidungsprozesse auszuweiten und die Beziehung zwischen Staat und Gesellschaft zu verbessern, und könnten mit externer Unterstützung auch für andere fragile Kontexte angepasst werden. Durch Initiativen dieser Art könnten die Geber einen größeren Beitrag zu nachhaltigen und langfristigen Friedens- und Staatsbildungsprozessen in konfliktbetroffenen MENA-Ländern leisten.
    Date: 2020

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