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Political Ambiguity and Economic Development: The MENA Countries

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  • Juliane Brach

    ()
    (The Knowledge Company, Germany; Maastricht School of Management, The Netherlands)

  • Willem Spanjers

    ()
    (Kingston University, UK; The Rimini Centre for Economic Analysis, Italy)

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    Abstract

    In this paper we provide a coherent framework for analyzing the impact of incalculable political risk, i.e. political ambiguity, on economic development and the choice of development strategy. Using indicators for the levels of internal and external political ambiguity, we analyze the growth paths of MENA countries based on annual data for the period from 1980 to 2008. Succession rules for governments are our indicator for internal political ambiguity, the potential for becoming involved in disruptive international conflicts serves as an indicator for external political ambiguity. Our results show that political ambiguity has a negative impact on both the level of per capita GDP and its growth. Our theoretical model suggests that political ambiguity biases development strategies, leading to an underinvestment in intensive sources of growth.

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    File URL: http://www.rcfea.org/RePEc/pdf/wp66_12.pdf
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    Bibliographic Info

    Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 66_12.

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    Date of creation: Nov 2012
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    Handle: RePEc:rim:rimwps:66_12

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    Related research

    Keywords: economic development; decision making; ambiguity; development strategy; political economy; Middle East and North Africa;

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    References

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    1. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
    2. Eichberger, J. & Kelsey, D., 1996. "E-Capacities and the Ellsberg Paradox," Discussion Papers 96-13, Department of Economics, University of Birmingham.
    3. Juliane Brach, 2010. "Technological Readiness in the Middle East and North Africa – Implications for Egypt," GIGA Working Paper Series 155, GIGA German Institute of Global and Area Studies.
    4. Grant, Simon & Chateauneuf, A. & Eichberger, J., 2002. "Choice under Uncertainty with the Best and Worst in Mind: Neo-additive Capacities," Working Papers 2002-10, Rice University, Department of Economics.
    5. Jan Fagerberg & Martin Srholec & Bart Verspagen, 2009. "Innovation and Economic Development," Working Papers on Innovation Studies 20090723, Centre for Technology, Innovation and Culture, University of Oslo, revised Oct 2009.
    6. Soete, Luc & Freeman, Chris, 2007. "Developing science, technology and innovation indicators: what we can learn from the past," MERIT Working Papers 001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages F22-F49, 02.
    8. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
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