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Exploring Lebanon's growth prospects

Author

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  • Berthelemy, Jean-Claude
  • Dessus, Sebastien
  • Nahas, Charbel

Abstract

This paper attempts to identify Lebanon's greatest constraints to economic growth, following a growth diagnosis approach. It concludes that fiscal imbalances and barriers to entry are most binding on long-term growth. Macroeconomic imbalances and related perceived risks affect the nature of investment decisions in Lebanon, in favor of liquid instruments rather than longer-term productive investments. Further, many barriers to entry discourage agents from investing in a number of markets: legal impediments to competition, corruption, and a set of fiscal incentives favoring the allocation of resources to non-tradable sectors, where potential demand and investment opportunities are scarcer. In turn, using a steady-state computable general equilibrium model, the paper assesses the long-term growth impact of a selected set of policy reforms envisaged to lift such constraints. Results suggest that 1 to 2 percentage points of additional GDP growth per year could be gained through public expenditure reform, greater domestic competition, and tax harmonization.

Suggested Citation

  • Berthelemy, Jean-Claude & Dessus, Sebastien & Nahas, Charbel, 2007. "Exploring Lebanon's growth prospects," Policy Research Working Paper Series 4332, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4332
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    Cited by:

    1. World Bank, 2012. "Republic of Lebanon--Good Jobs Needed : The Role of Macro, Investment, Education, Labor and Social Protection Policies," World Bank Other Operational Studies 13217, The World Bank.
    2. Mansour Omeira & Simel Esim & Sufyan Alissa, 2008. "Labor Governance and Economic Reform in the Middle East and North Africa: Lessons from Nordic Countries," Working Papers 436, Economic Research Forum, revised 09 Jan 2008.

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    Keywords

    Economic Theory&Research; Debt Markets; Emerging Markets; Access to Finance;

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