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.

Growth of Micro, Small and Medium enterprises (MSMEs) in MENA countries: constraints and success factors

Rim Ben Ayed Mouelhi and Monia Ghazali

This study attempts to contribute to a better understanding of the main constraints/ boosters for MSME growth in selected countries of the MENA region (Tunisia, Egypt, Morocco and Jordan). A multinomial logit model is used to investigate the impact of a three-fold classification of firm growth determinants (company characteristics, manager characteristics and business environment characteristics). The Database is provided by the World Bank Enterprise Surveys (MENA ES). Results give statistically robust evidence that innovative firms are more likely to grow. Therefore, the implementation of efficient and well governed systems of innovation is a priority in MENA region.

Mixed market structure, competition and market size- How does product mix respond?

Aya Elewa

Assuming a double heterogeneity; within industry firm heterogeneity and within firm product heterogeneity, this paper investigates how multi-product firms respond to tougher competition and greater market size across destinations. Building a theoretical model where monopolistically competitive and oligopolistic firms coexist in the same market, the paper studies how an increase in market size affects both types of firms’ behavior. The model shows that the final impact of bigger market size on the product-mix of multiproduct firms depends on the level of fixed entry costs. For low level of entry costs, big firms increase their product-mix when they export to larger markets as they benefit from scope economies. Yet, when fixed costs are prohibitive, a larger market induces firms to skew their export sales toward their core product. Very strong confirmation of this non-monotonic effect of market size was found for Egyptian exporters across export market destinations.

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