Working papers

Using nationally representative data from Algeria and Jordan, this paper shows that social networks are crucial in labour market intermediation in Arab countries. We make use of binary and ordered probit regressions, corrected for sample selection using the Heckman model, to investigate determinants of job search intensity and determinants of the probability of finding a job through social contacts. After factoring the sample selection, our findings suggest that the use of population density as a proxy for the size and strength of social networks may only be appropriate for the studies of minorities and immigrants.  We propose that strong ties (closer friends and relatives, and maybe friends on social media) may be more crucial in job finding than weak ones (number of inhabitants in adjacent areas). On average, the analysis shows that job search is more intensive in Jordan compared to Algeria. Among others, household wealth, the local unemployment rate, region, previous labour market experience, and to some extent education, appear to exert significant roles in determining intensity. Importantly, the study finds that social networks are a popular method of finding a job in Algeria and Jordan, but not for skilled jobs. Such methods increase the probability of obtaining less secured informal jobs.  Finally, the study also shows that despite the importance of public sector agencies in the job search process, less than 5% in Algeria and 9% in Jordan of the young employed state that such agencies have helped them transit into employment.

This paper represents the first study to examine convergence of bank competition in the Middle East and North Africa (MENA) and the impact of bank market power on growth. Using a sample from 16 countries over 2005-14 and forming macro-regions based on oil export allowances to capture intra-regional country differences, our results suggest that banking competition has increased over the period under investigation. In addition, using alternative tests, we find clear evidence of convergence in banking competition across the three macro-regions, as well as in MENA as a whole. Further, our results show that industrial sectors that are normally more dependent on external financing grow faster in countries characterised by greater financial development. Finally, our analysis of the impact on economic growth points to a positive and significant effect of bank market power on economic growth in two out of three macro-regions. This is in line with the relationship lending literature that suggests that in a competitive environment, banks will be less willing to avail finance to informationally opaque firms. A major implication of this analysis is that some degree of market power in the banking sector may be beneficial because it can improve lending availability and, hence, economic growth.

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.