Publications

This paper studies the impact of productive investment subsidies on firms’ production decisions under credit market frictions. Through the practice of secured borrowing, collateral constraints present a friction in external credit markets, which substantially affects access to credit by smaller firms located in economically depressed areas. Productive investment subsidies are able to smooth out these frictions and stimulate marginal investment by firms which would have otherwise remained unfunded, thus supporting private capital development. Empirical evidence is obtained from a productive investment subsidies programme, to support recovery following two major earthquakes in Italy. The identification design facilitates recognition of the impact of subsidies across a random sample of firms, including firms that are generally not targets of traditional subsidy programmes for development. Furthermore, the absence of conditionality clauses for employment allows an unbiased estimate of the impact on labour input decisions. The results suggest the effectiveness of investment subsidies in supporting capital development and employment generation in the case of SMEs, with firm location playing a significant role in determining the relative impact strength.

The paper proposes a chronology for the Egyptian economy, by detecting phases of expansions and recessions during the period (2002-2019). It examines the cyclical behaviour of variables that are considered potentially useful in measuring or predicting aggregate economic activity. To do so, we combine the National Bureau of Economic Research (NBER) approach, together with time series analysis techniques, to select the variables best suited to play the role of coincident and leading indicators. This methodology is found to be the most appropriate when there is no well-established reference chronology as a benchmark for the cyclical analysis, which is the case of Egypt. As a result, two composite indexes are constructed: 1) The composite index of Coincident Economic Indicators (CEI), which can be considered as an adequate measure for the Egyptian business cycle. 2) The composite index of Leading Economic Indicators (LEI) that showed good performance in anticipating aggregate economic activity in Egypt. Moreover, the empirical results indicate that total employment, consumption and investment moved coincidently with the reference cycle, whilst exchange rate and interest rate variables appeared to lead the reference cycle and showed strong predictive power for economic activity in Egypt.

Empirical verification of economic convergence between countries, which is carried out mainly through GDP per capita or similar unidimensional indicators, has produced mixed results. This study sets out stages for developing countries on their development path and provides an analysis of the dynamics between them, using an alternative approach to an analysis of convergence based on a single criterion (GDP per capita). In addition, it identifies the factors that determine the belonging of countries to the upper stages of development. In this regard, the performances achieved by the newly industrialised countries in terms of balanced economic growth, structural transformation and diversified exportation, encourage the idea of an identification of a group or “club” of dynamic developing countries that can be called “emerging” countries. The concept of “economic emergence” relies to this idea and builds on the characteristics of these “emerging countries”.