Financial Development and Inclusion in Egypt, Jordan, Morocco and Tunisia

Rym Ayadi and Willem Pieter de Groen (Editors), Taghreed Hassouba and Chahir Zaki (Egypt), Nooh Alshyab and Serena Sandri (Jordan), Idriss Elabbassi, Aziz Ragbi and Said Tounsi (Morocco), Soumaya Ben Khelifa, Olfa Benouda Sioud, Rania Makni and Dorra Mezzez Hmaied (Tunisia)

The link between financial development and sustainable economic growth is complex. The academic literature published on this topic in recent years finds that financial development contributes to growth up to a certain tipping point. Beyond this tipping point, financial development would make the overall system more fragile. The benefits of financial development and the level of the tipping point seem to vary between economies. Among the factors that contribute to the variance are the composition of the financial system (institutions and market based intermediation), access (financial inclusion) and efficiency (government interventions, allocation, etc.). The complexity of the relationship between financial development and economic growth requires the assessment of the factors affecting the relationship in order to determine the most effective policies. In this study, we provide an assessment of the various factors determining financial development in terms of the financial sector structure, contribution to the economy and financial inclusion in four countries mainly Egypt, Jordan, Morocco and Tunisia.

On Modelling the Determinants of TFP in the MENA Region: A Macro-Micro Firm-Level Evidence

Nesreen Seleem, Chahir Zaki

Using enterprise surveys for MENA countries, this paper estimates total factor productivity (TFP) and examines its determinants. Our contribution is twofold. First, we provide TFP estimates by country and sector for the MENA region and examine how TFP changes by export status, age, firm size, formal status and ownership. Second, we combine both micro (firm level) and macro (nation level) determinants of TFP. Our findings show that among the micro determinants, government ownership, foreign capital, female managers, owning a foreign certification, and formal registrations of firms are all positively associated with TFP, with competition also exerting a positive impact on firms’ productivity. All the macro determinants on the other hand, with the exception of trade openness, display the expected impact on TFP as suggested by the literature. Longer time to enforce contracts, high tax burden and high lending rates tend to have a significantly negative impact on TFP. Higher tariffs, however, has a surprisingly positive impact on TFP which may emphasize the adverse impact trade openness can have on TFP as a result of the economy’s increased dependence on imported products and its limited ability to absorb the positive spillovers of trade.

Return migration and socioeconomic mobility in MENA:Evidence from labour market panel surveys

Vladimir Hlasny and Shireen AlAzzawi

This study examines the effects of cross-border return migration on intertemporal and intergenerational transmission of socio-economic status across six new harmonized surveys from three Arab countries: Egypt (1998, 2006, 2012), Jordan (2010, 2016) and Tunisia (2014). We link individuals’ current outcomes to those in prior years and to their parents’ outcomes. We first isolate the outcomes of interest – income, employment status, household wealth based on both productive and non-productive assets, and residence status. Next, we evaluate individuals’ socioeconomic mobility over time and across generations as a function of their migration histories. Return migrants, current migrants, and (yet) non-migrants are distinguished. Transitions in individuals’ outcomes across years and generations are made functions of pre-existing socioeconomic status, demographics and migration status.

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