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State business relations and innovation in the MENA region

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  • Mohamed Ismail Sabry

Abstract

Understanding that Innovation is a major determinant of economic growth, this paper is investigating how to foster Innovation in the Middle East and North Africa (MENA) region given the institutional deficiencies suffered in many of its countries. More specifically, this paper is trying to find out how State-Business Relations (SBR) have contributed to Innovation capacities of the MENA. It also investigates whether SBR have counteracted some of the region's institutional deficiencies which hinder Innovation. While doing this, this paper differentiates between formal SBR (e.g. public private dialogues) and informal SBR (relations based on family, ethnic or political connections), and puts more theoretical emphasis on the National Innovation System (NIS) approach for fostering innovation. It uses regression analysis and provides three relatively (Innovation-wise) advanced non-Gulf MENA countries as examples for the sake of enriching the discussion through a comparative analysis; these are: Egypt, Tunisia and Morocco. Using various multivariate panel OLS regressions, various important findings are obtained. The results suggest that stronger Business Associations, formal SBR and comprehensive institutional reform are needed for fostering Innovation in the MENA region. Even if Cronyism and crony-based informal SBR seem to provide a functional allocative mechanism counteracting some institutional deficiencies, yet, Cronyism do more harm than good to Innovation. Hence, institutional reform in the MENA region should also place more emphasis on eradicating Cronyism.

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  • Mohamed Ismail Sabry, 2018. "State business relations and innovation in the MENA region," Middle East Development Journal, Taylor & Francis Journals, vol. 10(2), pages 195-224, July.
    • Handle: RePEc:taf:rmdjxx:v:10:y:2018:i:2:p:195-224
    DOI: 10.1080/17938120.2018.1520003
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    Cited by:

    1. Sinha, Avik & Shah, Muhammad Ibrahim & Sengupta, Tuhin & Jiao, Zhilun, 2020. "Analyzing Technology-Emissions Association in Top-10 Polluted MENA Countries: How to Ascertain Sustainable Development by Quantile Modeling Approach," MPRA Paper 100253, University Library of Munich, Germany, revised 2020.
    2. Burhan Can Karahasan & Fırat Bilgel, 2020. "State–Business Relations, Financial Access and Firm Performance: A Causal Mediation Analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(7), pages 1033-1074, October.
    3. Mohamed Ismail Sabry, 2022. "Arab-German Trade and Institutions: The Effect of Good Governance on Arab Exports to Germany," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(5), pages 2400-2437, October.

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