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Reform complementarities and economic growth in the Middle East and North Africa

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  • Mustapha Kamel Nabli

    (World Bank, Washington, D. C., USA)

  • Marie-Ange Véganzonès-Varoudakis

    (CERDI, CNRS, Université d'Auvergne, Clermont Ferrand, France)

Abstract

In this paper we empirically analyse the linkages amongst economic reforms, human capital, physical infrastructure, and growth for a panel of 44 developing countries over 1970-1980 to 1999. For this purpose, we generate aggregated reform indicators using principal component analysis. We show that the growth performance of Middle East and North Africa (MENA) has been disappointing because these economies have lagged behind in terms of economic reforms. However, our analysis also reveals that the growth dividend of some reforms has been small. This is the case when structural reforms are implemented in an unstable macroeconomic environment (which corresponds to the situation of the MENA countries in the 1980s), and when macroeconomic reforms are accompanied by a low level of structural reforms (as observed during the 1990s). Our result illustrates the complementarities between reforms as modelled by Mussa (1987) and Williamson (1994). Actually, after human capital and physical infrastructure, our analysis finds that macroeconomic and external stability are key variables for the reform process and for the growth prospects of the developing world. Copyright © 2006 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 19 (2007)
Issue (Month): 1 ()
Pages: 17-54

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Handle: RePEc:wly:jintdv:v:19:y:2007:i:1:p:17-54

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Web page: http://www3.interscience.wiley.com/journal/5102/home

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Cited by:
  1. Marie-Ange VEGANZONES-VAROUDAKIS & Patrick PLANE & Tidiane KINDA, 2011. "Firm Productivity and Investment Climate in Developing Countries: How Does Middle East and North Africa Manufacturing Perform?," Working Papers 201126, CERDI.
  2. Kinda, Tidiane & Plane, Patrick & Veganzones-Varoudakis, Marie-Ange, 2009. "Firms'productive performance and the investment climate in developing economies : an application to MENA manufacturing," Policy Research Working Paper Series 4869, The World Bank.
  3. Mustapha Kamel Nabli, 2007. "Breaking the Barriers to Higher Economic Growth : Better Governance and Deeper Reforms in the Middle East and North Africa," World Bank Publications, The World Bank, number 6914, August.

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