Advanced Search
MyIDEAS: Login to save this paper or follow this series

Governance and Private Investment in the Middle East and North Africa

Contents:

Author Info

  • Marie-Ange VEGANZONES-VAROUDAKIS

    ()
    (Centre d'Etudes et de Recherches sur le Développement International)

  • NABLI
  • Ahmet Faruk AYSAN

Abstract

This paper addresses the issue of the low level of private investment in the Middle East and North Africa (MENA) region, with special emphasis on the role of governance. Based on the existing literature, we have categorized what types of governance institutions are more detrimental to entrepreneurial investments. We have then estimated a simultaneous model of private investment and governance quality where economic policies concurrently explain both variables. Our empirical results show that governance plays a significant role in private investment decisions. This result is particularly true in the case of “Administrative Quality” in the form of control of corruption, bureaucratic quality, investment-friendly profile of administration, and law and order, as well as for “Political Stability”. Evidence in favor of “Public Accountability” seems, however, less robust. Our estimations also stress that structural reforms -- such as financial development and trade openness – and human development affect private investment decisions directly, and/or through their positive impact on governance. These findings bring new empirical evidence on the subject of private investment in the developing world and in MENA countries in particular.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://publi.cerdi.org/ed/2006/2006.27.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CERDI in its series Working Papers with number 200627.

as in new window
Length: 65
Date of creation: 2006
Date of revision:
Handle: RePEc:cdi:wpaper:849

Contact details of provider:
Postal: 65 Bd. F. Mitterrand, 63000 Clermont-Ferrand
Phone: (33-4) 73 17 74 00
Fax: (33-4) 73 17 74 28
Web page: http://cerdi.org/
More information through EDIRC

Related research

Keywords: governance; private investment; institutions; Middle East and North Africa.;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Psacharopoulos, George, 1988. "Education and Development: A Review," World Bank Research Observer, World Bank Group, World Bank Group, vol. 3(1), pages 99-116, January.
  2. Shang-Jin Wei, 2000. "Natural openness and good government," Policy Research Working Paper Series, The World Bank 2411, The World Bank.
  3. Aymo Brunetti & Beatrice Weder, 1994. "Political credibility and economic growth in less developed countries," Constitutional Political Economy, Springer, Springer, vol. 5(1), pages 23-43, December.
  4. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," NBER Working Papers 10568, National Bureau of Economic Research, Inc.
  5. William Easterly & Ross Levine, 2002. "Tropics, Germs, and Crops: How Endowments Influence Economic Development," Working Papers, Center for Global Development 15, Center for Global Development.
  6. Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 7(3), pages 51-69, Summer.
  7. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  8. Acemoglu, Daron & Robinson, James A, 1999. "A Theory of Political Transitions," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2277, C.E.P.R. Discussion Papers.
  9. Gylfason, Thorvaldur, 2000. "Natural Resources, Education, and Economic Development," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2594, C.E.P.R. Discussion Papers.
  10. Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series, The World Bank 2283, The World Bank.
  11. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 681-712, August.
  12. Daron Acemoglu & Robert Shimer, 1998. "Efficient Unemployment Insurance," NBER Working Papers 6686, National Bureau of Economic Research, Inc.
  13. A. Chong & C. Calderón, 2000. "Causality and Feedback Between Institutional Measures and Economic Growth," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 12(1), pages 69-81, 03.
  14. Sanjeev Gupta & Hamid Davoodi & Rosa Alonso-Terme, 2002. "Does corruption affect income inequality and poverty?," Economics of Governance, Springer, Springer, vol. 3(1), pages 23-45, 03.
  15. Saleh, Jahangir, 2004. "Property rights institutions and investment," Policy Research Working Paper Series, The World Bank 3311, The World Bank.
  16. Perotti, Roberto & Alesina, Alberto, 1996. "Income Distribution, Political Instability, and Investment," Scholarly Articles 4553018, Harvard University Department of Economics.
  17. Ricardo J. Caballero & Arvind Krishnamurthy, 2002. "A Dual Liquidity Model for Emerging Markets," American Economic Review, American Economic Association, American Economic Association, vol. 92(2), pages 33-37, May.
  18. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, Elsevier, vol. 12(1-2), pages 59-73.
  19. Azariadis Costas & Lahiri Amartya, 2002. "Do Rich Countries Choose Better Governments?," The B.E. Journal of Macroeconomics, De Gruyter, De Gruyter, vol. 2(1), pages 1-39, June.
  20. Stanley L Engerman & Kenneth L. Sokoloff, 2002. "Factor Endowments, Inequality, and Paths of Development Among New World Economics," NBER Working Papers 9259, National Bureau of Economic Research, Inc.
  21. Simeon Djankov & Rafael La Porta & Florencio LopezdeSilanes & Andrei Shleifer, 2000. "The Regulation of Entry," NBER Working Papers 7892, National Bureau of Economic Research, Inc.
  22. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, Springer, vol. 9(2), pages 131-165, 06.
  23. Daniel Kaufmann & Aart Kraay & Massimo Mastruzzi, 2003. "Governance Matters III: Governance Indicators for 1996-2002," Macroeconomics, EconWPA 0308006, EconWPA.
  24. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(2), pages 688-726, June.
  25. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  26. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, American Economic Association, vol. 91(5), pages 1369-1401, December.
  27. Aizenman, Joshua & Marion, Nancy, 1999. "Volatility and Investment: Interpreting Evidence from Developing Countries," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 66(262), pages 157-79, May.
  28. Mo, Pak Hung, 2001. "Corruption and Economic Growth," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 66-79, March.
  29. Rauch, James E & Evans, Peter B., 1999. "Bureaucratic Structure and Bureaucratic Performance in Less Developed Countries," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt0sb0w38d, Department of Economics, UC San Diego.
  30. Daron Acemoglu & Simon Johnson & James Robinson & Yunyong Thaicharoen, 2002. "Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth," NBER Working Papers 9124, National Bureau of Economic Research, Inc.
  31. Lant Pritchett & Michael Woolcock & Gwen Busby & Jonathan Isham, 2004. "The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth," Middlebury College Working Paper Series, Middlebury College, Department of Economics 0308r, Middlebury College, Department of Economics.
  32. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 407-37, May.
  33. Oded Galor & Omer Moav & Dietrich Vollrath, 2005. "Land Inequality and the Emergence of Human Capital Promoting Institutions," Development and Comp Systems, EconWPA 0502018, EconWPA.
  34. Shafik, Nemat & Shafik, Nemat, 1992. "Modeling private investment in Egypt," Journal of Development Economics, Elsevier, Elsevier, vol. 39(2), pages 263-277, October.
  35. Vito Tanzi & Hamid Reza Davoodi, 1997. "Corruption, Public Investment, and Growth," IMF Working Papers, International Monetary Fund 97/139, International Monetary Fund.
  36. Serven, Luis, 1997. "Uncertainty, instability, and irreversible investment : theory, evidence, and lessons for Africa," Policy Research Working Paper Series, The World Bank 1722, The World Bank.
  37. Beck, T.H.L. & Clarke, G. & Groff, A. & Keefer , P. & Walsh, P., 2001. "New tools in comparative political economy: The database of political institutions," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-3125517, Tilburg University.
  38. Svensson, Jakob, 1998. "Investment, property rights and political instability: Theory and evidence," European Economic Review, Elsevier, Elsevier, vol. 42(7), pages 1317-1341, July.
  39. Rodrik, Dani, 1991. "Policy uncertainty and private investment in developing countries," Journal of Development Economics, Elsevier, Elsevier, vol. 36(2), pages 229-242, October.
  40. Quan V. Le, 2004. "Political and economic determinants of private investment," Journal of International Development, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 16(4), pages 589-604.
  41. Alesina, Alberto, et al, 1996. " Political Instability and Economic Growth," Journal of Economic Growth, Springer, Springer, vol. 1(2), pages 189-211, June.
  42. Andrew Berg & Anne O. Krueger, 2003. "Trade, Growth, and Poverty," IMF Working Papers, International Monetary Fund 03/30, International Monetary Fund.
  43. Olson, Mancur, Jr & Sarna, Naveen & Swamy, Anand V, 2000. " Governance and Growth: A Simple Hypothesis Explaining Cross-Country Differences in Productivity Growth," Public Choice, Springer, Springer, vol. 102(3-4), pages 341-64, March.
  44. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, American Economic Association, vol. 89(3), pages 379-399, June.
  45. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, Elsevier, vol. 40(6), pages 1203-1228, June.
  46. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, American Economic Association, vol. 89(4), pages 982-993, September.
  47. Schmidt-Hebbel, Klaus & Muller, Tobias, 1991. "Private investment under macroeconomic adjustment in Morocco," Policy Research Working Paper Series, The World Bank 787, The World Bank.
  48. Roubini, Nouriel & Swagel, Phillip & Ozler, Sule & Alesina, Alberto, 1996. "Political Instability and Economic Growth," Scholarly Articles 4553024, Harvard University Department of Economics.
  49. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, Elsevier, vol. 5(2), pages 181-189, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Ahmet Faruk Aysan & Zeynep Ersoy & M-A Veganzones-Varoudakis, 2007. "Does the Perception of Governance Institutions Matter for Private Investment: The Case of Middle East and North Africa," Working Papers, Bogazici University, Department of Economics 2007/03, Bogazici University, Department of Economics.
  2. José Aixalá & Gema Fabro, 2009. "Economic freedom, civil liberties, political rights and growth: a causality analysis," Spanish Economic Review, Springer, Springer, vol. 11(3), pages 165-178, September.
  3. Alaya MAROUANE (Université de Tunis) & Dalila NICET-CHENAF (GREThA-GRES) & Eric ROUGIER (GREThA-GRES), 2008. "The law of growth and attraction: an endogenous model of absorptive capacities, FDI and income for MENA countries," Cahiers du GRES, Groupement de Recherches Economiques et Sociales 2008-21, Groupement de Recherches Economiques et Sociales.
  4. Dalila NICET-CHENAF (GREThA UMR CNRS 5113) & Eric ROUGIER (GREThA UMR CNRS 5113), 2009. "FDI and growth: A new look at a still puzzling issue," Cahiers du GREThA, Groupe de Recherche en Economie Théorique et Appliquée 2009-13, Groupe de Recherche en Economie Théorique et Appliquée.
  5. Rafael Alexis Acevedo Rueda & José U. Mora Mora, 2008. "Sociopolitical and judicial factors as determinants of private investment in Latin America," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 33(26), pages 93-118, july-dece.
  6. Enowbi Batuo, Michael & Fabro, Gema, 2009. "Economic Development, Institutional Quality and Regional integration: Evidence from Africa Countries," MPRA Paper 19069, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cdi:wpaper:849. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vincent Mazenod).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.