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on MENA - Middle East and North Africa |
| By: | Nong Zhu (Institut National de la Recherche Scientifique); Xubei Luo (The World Bank) |
| Abstract: | In a digitalizing global economy, countries that successfully harness the potential of e-commerce are better placed to take advantage of the access to regional and international markets for sustainable growth, while those that fail to do so may risk falling behind. For the Middle East and North Africa (MENA) region, digitalization of business activities is key to connect producers with customers, support the integration of regional and global value chains (GVCs), and foster the dynamism of private sector to aid productive job creation and inclusive growth. This study aims to examine the relationships between participation in e-commerce and firm performance (measured by production, productivity, export and/or import, and innovation) in MENA, with case studies in Jordan, Morocco, and Egypt. The analyses are based on an original survey at firm-level, carried out by the Economic Research Forum (ERF) in 2022, and data from the World Bank Enterprise Survey. The main findings are as follows: (i) E-commerce participation is relatively low in the three case study countries compared with regional peers or countries with similar development levels. (ii) E-commerce participation varies widely across firms with different characteristics: large firms, young firms, firms in “information and communication” sector, and firms with more educated workers are more likely to participate in e-commerce. (iii) Production is positively associated with e-commerce participation. However, among the three countries, the positive association between e-commerce participation and productivity is significant only in Jordan where e-commerce is most developed. (iv) Participation in e-commerce is also positively associated with firms’ exports and/or imports and innovation activities. (v) Depending on the level of e-commerce development and the structural characteristics, the role of the difference in the attributes between e-firms and non-efirms and the difference in the returns to these attributes in firm performance may vary. (vi) Firms involved in e-commerce are performing better than other firms during the COVID-19 pandemic. Overall, our study finds that e-commerce is positively associated with the viability of enterprises and their ability to maintain the level of sales. |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1637&r=ara |
| By: | Chahir Zaki (Cairo University) |
| Abstract: | Generally, digitalized firms are more productive, more likely to export, and more likely to rely skilled labor. This paper thus analyzes the effect of digitalization on firms’ performance (measured by exports and sales) and labor characteristics (measured by female workers, unpaid workers, parttime workers and workers with permanent contract). To do so, I rely on a newly collected dataset that focuses on firms’ digitalization. I use variables related to digitalization (whether the firm has a website or not, uses smartphones or not, online selling and buying, the Internet, is listed on an application and self-built sales website that enables online payments). The main findings show that the results are more robust for labor characteristics than for performance variables. Indeed, while, in Egypt, digitalization is associated to more women, less unpaid workers and more workers with permanent contract, the result is less robust for sales and exports. Yet, for sales, the use of the Internet is significant in both Egypt and Jordan. Listing the firm on an application is positively associated to sales in Egypt but not in Jordan. In terms of exports, self-built websites for payments in Egypt and using Internet in Jordan are significant. |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1636&r=ara |
| By: | Ahmed Farouk Ghoneim (Cairo University); Dina Atef Mandour (Cairo University) |
| Abstract: | This paper aims at investigating the role of digitalization and the so-called disruptive technologies (DTs) in Middle East North Africa (MENA) and Sub-Saharan Africa (SSA) regions. It builds on a number of studies that have been devoted to investigate the impact of digitalization on individual countries in both regions, as well as a couple of regional reports. The paper tackles two main aspects of digitalization and DTs in MENA and SSA. The two main aspects are readiness(determinants of the sets of the two regions, MENA and SSA, to adopt new technologies), and the effects of adopting digitalization and DTs, or the lack thereof, on different aspects of the economies of both regions. The study pinpoints the gap between MENA and SSA, both in terms of readiness indicators, as well as effects. The study concludes that digitalization, so far, has limited positive impact on both SSA and MENA regions. The positive impact can be larger provided that the determinants or preconditions for allowing it to play this role are present. Such preconditions include the required infrastructure (both physical and data), the appropriate institutional and legal framework, the needed human capital, etc |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1638&r=ara |
| By: | Chahir Zaki (Cairo University) |
| Abstract: | Digitalization refers to the transition from an industrial age characterized by traditional technologies to a new era in which commerce, innovation, and other dimensions are driven by digital technologies. The objective of this paper is twofold: first to examine the characteristics of the firms who adopt digital technologies by focusing on two emerging markets, which are Egyp and Jordan. Second, this paper analyzes the potential explanations behind the under-performance of these two countries compared to other emerging economies. The main findings show that firms having an owner whose education level is university and above and who is a woman are more likely to be digitized, especially in Egypt. Moreover, firms that spend on R& D and operating in the services sector adopt and use different digital platforms. Small and medium firms are generally facing several impediments and are not as digitized as large ones. Numerous bottlenecks hinder digitalization in these countries namely the legal and human infrastructure as well as the general quality of institutions including service restrictions. |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1635&r=ara |
| By: | Fida Karam (Gulf University for Science and Technology); Chahir Zaki (Faculty of Economics and Political Science, Cairo university, Egypt) |
| Abstract: | This paper looks at the transition of workers in the MENA region between formal and informal jobs during the COVID-19 pandemic, and investigates whether trade policy could be used as a measure to enhance the transition of workers from the informal to the formal sector. We use the Combined COVID-19 MENA Monitor Household Survey constructed by the Economic Research Forum for 5 MENA countries and 11 sectors. We obtain the following results. First, fewer trade restrictions are associated with an increased probability for the worker to become formal and this effect is more pronounced post-pandemic relative to before February 2020. Second, fewer trade restrictions are linked to an increase in the probability of becoming formal for blue collar workers only, with an insignificant effect on white collar workers. Third, fewer trade restrictions are associated with an increase in the probability of men to become formal, with an insignificant effect on women. Last but not least, the effect of trade policy on job formality depends on the sectoral occupation of the individual with the effect being more pronounced in agriculture and manufacturing relative to services sectors. |
| Date: | 2023–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1628&r=ara |
| By: | Rania Mechergui (University of La Manouba); Rim Mouelhi (University of La Manouba) |
| Abstract: | Although industrialization has long been considered crucial for economic development and growth, the economic landscape of many developed and developing countries has experienced a huge decline in the weight of the industry and manufacturing sectors over the last decades. This paper aims to shed some light on the phenomenon of deindustrialization – defined as a sustained decline in the share of industry, especially manufacturing, gross domestic product, and employment – in Tunisia. We use an autoregressive distributed lag bounds testing approach (ARDL) and data from 1998 to 2017 to investigate the impact of different factors (such as trade openness, economic development, competitiveness, productivity growth, FDI inflows, investment, innovation, and human capital) on the process of industrialization/deindustrialization. The descriptive analysis shows that the Tunisian economy started to deindustrialize recently at a low level of GDP per capita, which is a sign of premature deindustrialization. Furthermore, the empirical results reveal that the main factor behind deindustrialization in Tunisia is a lack of competitiveness; however, trade openness contributes positively to the process of industrialization. |
| Date: | 2023–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1643&r=ara |
| By: | Adel Ben Youssef (University Côte d’Azur) |
| Abstract: | E-commerce is a global trend that is having an impact on consumers and businesses. While this trend is increasing, its adoption by Moroccan firms is low and research on this context and topic is limited. This paper tries to redress this by analyzing the determinants of adoption of ecommerce by firms in Morocco. We employ a probit model to identify the main factors affecting adoption of e-commerce by Moroccan firms. The results provide five main findings. First, due to their greater openness to innovation and the change, newer firms are more likely to adopt e-commerce. Second, firms with larger numbers of higher educated workers are more likely to adopt e-commerce. Third, the level of new employees’ digital skills has no effect on the probability of adopting e-commerce. Fourth, listing on digital platforms increases the probability of e-commerce adoption. Fifth, innovation activity has a positive effect on adoption of e-commerce by Moroccan firms. These findings suggest the need for more investment to enable adoption of new organizational practices, reskilling of workforces, and use of new technologies to facilitate effective adoption of e-commerce by firms. |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1639&r=ara |
| By: | A. Yasemin Yalta (Department of Economics, Hacettepe University, Turkey); A. Talha Yalta (Department of Economics, TOBB University of Economics and Technology, Turkey) |
| Abstract: | In the recent years deposit dollarization in Turkey has been on the rise, reaching record levels in 2021. This was caused by a series of economic as well as political shocks namely the coup attempt in 2016, the switch to the presidential system in 2018, and the Covid-19 pandemic in 2020. This study contributes to the literature by examining the time varying reactions of deposit dollarization to the changing inflation, interest rate volatility, real exchange rate, and the consumer confidence before and after these shocks experienced by the country. The results based on rolling window maximum entropy bootstrap estimates, and monthly data between 2013 and 2021, reveal that all of the model variables had significant and sometimes asymmetric effects on deposit dollarization during different stages of this turbulent period. In particular, we observe a weakening effect of both inflation and the real exchange rate over time, while the impact of interest rate volatility increases after 2017. Therefore, a policy change toward increasing monetary policy credibility is required for achieving de-dollarization in the Turkish economy. |
| Date: | 2023–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1626&r=ara |
| By: | Yasmine Kamal (Cairo University) |
| Abstract: | This study explains the export behavior of Egyptian firms under demand volatility in destination countries using detailed customs data and high-dimensional fixed effects. It finds that demand volatility negatively affects both intensive and extensive export margins. The effects are particularly evident for large firms that reduce their export sales (especially over time) to more volatile destinations/products and are therefore more likely to exit from exporting more volatile products and less (more) likely to enter (exit) more volatile destinations. These findings corroborate recent literature that emphasizes the greater elasticity of large firms to foreign demand shocks. They are also in line with risk aversion models in which the average risk premium increases with firm size. Given the disproportionate adverse impacts on large exporters, we find that higher demand volatility leads to lower aggregate exports, especially to geographically close countries with low trade costs. Accordingly, uncertainty in demand lessens the positive effect of lower trade barriers on exports. |
| Date: | 2023–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1629&r=ara |
| By: | Mesbah Fathy Sharaf (Faculty of Arts, University of Alberta); Abdelhalem Mahmoud Shahen; Badr Abdulaziz Binzaid |
| Abstract: | This study investigates the causal relationship, if any exists, between external debt and inflation in Jordan over the period 1970 to 2020 within a multivariate framework by including other determinants of inflation. The study uses an ARDL bounds testing approach to cointegration to test the existence of a long-run relationship between the inflation and its drivers. An error correction model is estimated to reveal the short-run dynamics between the series. The direction of causality is examined using Toda-Yamamoto Granger non-causality test. The results suggest a statistically significant long-term relationship between inflation and its drivers. The TodaYamamoto Granger noncausality test reveals a bi-directional causality between inflation and external debt, between the nominal effective exchange rate and inflation, and between money supply and inflation. Proper management of the exchange rate policy, money supply and external debt levels is crucial to control inflation rates in Jordan. |
| Date: | 2023–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1641&r=ara |
| By: | Nadeen Omar (German University in Cairo) |
| Abstract: | Egypt is an emerging economy that has been going through a series of monetary reforms since the 1990s. Previous studies examined the effects of monetary policy with the assumption of a symmetric impact on the macroeconomic aggregates. We add to this line of literature with a recent investigation of both the symmetric and asymmetric effects of monetary policy on output and inflation in Egypt. This paper utilized the interest rate as the monetary policy instrument and retrieved quarterly data covering the period from 2007Q3 to 2019Q3. We apply both the linear and non-linear Auto-regressive Distributed Lag (ARDL) model. In addition, the paper employs an F-bounds test for cointegration and derives the dynamic multiplier to visualize the asymmetric effects. Despite a significant long-run impact on both macroeconomic variables, there is evidence for asymmetric effects on inflation, but not on output. We conclude with policy implications reflecting on Egypt’s plans of implementing an inflation-targeting (IT) regime. |
| Date: | 2023–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1627&r=ara |
| By: | Mohammed Elhaj Mustafa Ali (University of Khartoum); Ebaidalla M. Ebaidalla (University of Khartoum) |
| Abstract: | This paper examines the role of political Islam in encouraging cronyism in Sudan, with a focus on Munazzamat al-Dawa al-Islamiyya (MADA) businesses during the rule of former President Omar al-Bashir (1989-2019). The study focuses on the mechanisms by which MADA's businesses dominated the private sector and maintained the authoritarian regime. It also investigates the extent to which the regime's affiliates benefited in exchange for the benefits they provided to MADA. The study is based on data and information gathered through desk reviews and key informant interviews. The analysis reveals that although the organization's original goal was to spread Islam among non-Muslim societies, its mission has shifted to supporting the Islamist regime. MADA was heavily involved in business and its size grew dramatically during al-Bashir’s regime. The investigation shows that MADA has disproportionately benefited from privileged access to credit, tax breaks, trade protection, land, and preferential financial transactions granted via its 1990 Act. MADA provided Islamists with numerous benefits in exchange for these privileges, including job opportunities, cadre training, and continuous political support. Despite the lack of data, the analysis concludes that the rise of radical Islamists’ ideology aided the rise of cronyism in Sudan. This indicates that MADA played a significant role in extending al-Bashir’s rule for three decades; thus, it represents a pioneering experiment in the field of Islamist politics around the globe. |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1633&r=ara |
| By: | Idriss Hadj Nacer (London School of Economics and Sciences-Po Paris) |
| Abstract: | The analysis put forward in this paper strives to unveil the ideological and power balance dynamics of crony capitalism. It underlines the existence of two classes within this system: political sponsors and crony capitalists. It tries to demonstrate how the tension between these two groups puts the whole system into motion and provides it with vitality and dynamism. Far from being static, friction between these two classes is marked by various phases that form a coherent sequence that can be analyzed through the ideological narrative that is articulated during each phase of this sequence. It also aims to demonstrate that, in the case of Algeria, the power balance is in favor of political sponsors, despite attempts from crony capitalists to challenge this status quo. This research also tries to expand the learnings from the 5 case studies taken to a wider analysis of the ties between crony capitalism and neoliberal ideology, raising the following questions: are the rise of the two always correlated? If they are, can they even be separated or are they simply two sides of the same coin? What could be the future of crony capitalism’s ideological discourse? |
| Date: | 2023–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1632&r=ara |
| By: | Mounir Mahmalat (The Policy Initiative) |
| Abstract: | This paper presents a simple framework to analyze the micro mechanisms by which crises change policymaking. I conceptualize crises as moments of uncertainty in which political actors cannot anticipate the distribution of power in a post-crisis regime. The core argument of the framework is that the policy choices of policymakers during uncertainty depend on the incentives imposed by a polity of how politicians rally political support in a post-crisis regime. I illustrate the implications of the framework by focusing on the case of Lebanon, a fractionalized polity in which politicians derive their power from provisioning clientelist services, rather than electoral incentives. By leveraging a novel dataset on legislative activity, I show that these incentives change the choice of policy instruments in that, in the wake of uncertainty, politicians shift attention to administrative and personalized policy measures, rather than regulatory measures that can address a crisis. The results contribute to explaining why crises can fail to induce policy change as well as ambiguous results in the literature on the political economy of reform. |
| Date: | 2023–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1630&r=ara |
| By: | Mesbah Fathy Sharaf (Faculty of Arts, University of Alberta); Abdelhalem Mahmoud Shahen |
| Abstract: | This study tests the hypothesis that the real effective exchange rate changes have an asymmetric impact on the domestic output in Sudan from 1960 to 2020. The analysis uses a multivariate framework by controlling for the various channels through which exchange rate changes could affect domestic output. To disentangle the potential asymmetric impact of exchange rate changes on domestic income, we use the nonlinear autoregressive distributed lag (NARDL) framework of Shin et al. (2014) to separate real currency appreciations from depreciation. The results show that fiscal policy has no statistically significant effect on domestic output, while monetary policy has a statistically significant long-run contractionary effect. Results of the NARDL model show long-run asymmetry in the effect of real currency appreciations and depreciations. In particular, real currency appreciations (depreciations) have an expansionary (contractionary) effect on domestic output. There is a considerable difference in the magnitude of the effect of the positive exchange rate shocks compared to the negative shocks, in which the magnitude of the effect of the real currency appreciations on domestic output is almost double that of real currency deprecations. Monetary authorities in Sudan can use the real exchange rate as an effective instrument to affect domestic output in the long run. |
| Date: | 2023–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1640&r=ara |
| By: | Aditya Sarkar (Independent Researcher and Visiting Fellow, World Peace Foundation); Alex de Waal |
| Abstract: | This paper examines the relationship between ‘political finance’ and ‘political settlements’ in Sudan and Ethiopia. The countries are rarely compared, partially because governments in Addis Ababa and Khartoum pursued very different political and economic policies after the 1990s, such that Ethiopia was treated as a model developmental state, while Sudan faced recurrent political and economic crises. This paper argues that political finance – understood as discretionary cash available to a politician– has been a key determinant of the nature of political settlements in both countries, at all times mediated by violence or coercion. In turn, the nature of the political settlement has played a major role in shaping patterns of economic growth and development in these countries. Where political leaders have been able to exert control over and centralise the sources of political finance, so as to harness state power to achieve developmental goals, sustained economic growth has been the result. |
| Date: | 2023–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1625&r=ara |
| By: | Raimundo Soto (Pontificia Universidad Católica de Chile); Samir Makdisi (American University at Beirut and ERF) |
| Abstract: | Political violence is ubiquitous in many regions of the world, in particular the Middle East. This paper makes two contributions to our understanding of the outbreak of civil conflicts. We first extend the authoritarian bargain model to include uncertainty regarding the potential transfers available to the ruler to appease popular discontent. In our model, citizens care more for their “share of the pie” than the absolute size of the bargain transfer. We also expand the set of policies available to the ruler by including political repression. The second contribution is empirical: contrary to most of the literature, we use discrete-variable dynamic panel data models to consider that the likelihood of observing a civil war in a country at any point in time depends on having observed a conflict in the previous periods. This allow for proper modelling of unobserved heterogeneity, in particular with regards to initial conditions. |
| Date: | 2023–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1631&r=ara |
| By: | Mohammad Reza Farzanegan (University of Marburg); Sven Fischer (University of Marburg) |
| Abstract: | With a representative survey of 1, 214 participants conducted in early 2022, this study investigates the impact of the COVID-19 pandemic on marriage and childbirth in Iran. The results of the empirical investigation using logistic regressions suggest that the experience of unemployment due to the pandemic is positively associated with marriage during the pandemic and the experience of losing a close relative or family member is negatively associated with marriage. In addition, concern about the persistence of the pandemic and vaccination status show negative associations with childbirth during the pandemic. We found heterogenous effects depending on gender, location, and social class; for example, the negative effects of the concern about a prolonged pandemic and vaccination status are driven by female respondents. Overall, the results have implications for the development of the fertility rate and population in post-pandemic Iran. |
| Keywords: | COVID-19, pandemic, disaster, Iran, survey, logistic regression, marriage, fertility, family planning, inequality |
| JEL: | C83 D91 D1 J12 J13 P46 Q54 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202320&r=ara |
| By: | Kabbashi M. Suliman (University of Khartoum) |
| Abstract: | This paper reviews the state-business relations (SBRs) forged by the state rulers in Sudan who created influential historical legacies relating to the mobilization of the private sector, households, and firms for funding the state’s budget and programs. Our major objective is to understand why some rulers survived on productive rent, while others chose unproductive rent alternatives. The analysis focuses on unpacking the “implied” SBR policy deals in each case and assessing why the chosen policy succeeded and how the private sector was impacted. Literature on SBRs is new and largely dominated by industrial relations studies. Thus, in addition to this literature, the analytical framework draws from the recent literature on the comparative political economy of development. A major consensus in these strands of literature is that the emergence of state rulers who coordinate rather than fight is crucial for coercing SBRs that are decisive for ascending a spectrum of state types and social orders, along which the organizations of SBRs become less bound to rulers. The overall result reveals that the stability of the policy environment is a key pillar for the successful governance of the interactions between the rulers and private actors. Other results show that all rulers who effectively deployed SBRs reasonably separated the organization of the state from the organization of SBRs and heavily relied on the continuity of business norms to build trust for the internalization of their ideas and the mobilization of private actors. The comparative analysis of these experiences is hoped to draw some policy lessons for the reformist of SBRs in Sudan after the major shift in the source of power in favor of the revolutionists. |
| Date: | 2023–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1642&r=ara |
| By: | Carl Singleton (Department of Economics, University of Reading); Dominik Schreyer (Wissenschaftliche Hochschule für Unternehmensführung (WHU)) |
| Abstract: | In December 2022, Cristiano Ronaldo, five-time Ballon d'Or winner and the most-followed person on Instagram, signed a reported 200million euros contract to play football in the Kingdom of Saudi Arabia (KSA) for two and a half years. This marked one of several recent ground-shaking and expensive interventions by the KSA in global sports markets. We exploit the timing of this event, mid-way through a season of the Saudi Pro League, to estimate superstar effects. There are clear patterns showing that Ronaldo alone increased stadium attendance demand in the KSA, even before the influx of further stars in the summer of 2023. On average, Ronaldo helped to fill an additional 20% of the seats in his home team's stadium when he played, 15% of the seats in the stadiums he visited, and 3% of the seats where he did not even play. These effects may be the tip of the iceberg in terms of what policymakers will be hoping for. Regardless, they demonstrate that the astronomical sums being invested in sports markets by the Saudi state are not necessarily a total folly. |
| Keywords: | Attendance, Demand, Externalities, Football, Spectator sports, Superstars |
| JEL: | L83 Z2 |
| Date: | 2023–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2023-14&r=ara |
| By: | Abbas, Zafer |
| Abstract: | Taxation and Profitability of Banks in Jordan: Investigating the influence of taxation policies on the financial performance and profitability of banks operating in Jordan's unique economic landscape |
| Date: | 2023–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:uwnjk&r=ara |