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Trade, FDI and External Wealth in the Middle East and North Africa

Paper Session

Friday, Jan. 4, 2019 12:30 PM - 2:15 PM

Hilton Atlanta, 204
Hosted By: Middle East Economic Association
  • Chair: Mine Cinar, Loyola University Chicago

How Do Technical Barriers to Trade Affect Exports? Evidence from Egyptian Firm-Level Data

Chahir Zaki
,
Cairo University

Abstract

The paper examines the impact of Technical Barriers to Trade (TBT) on firms’ exports in Egypt over the period (2005-2011). It uses firm-level data for Egypt and combines it with TBT specific trade concerns database of the WTO. It estimates the effects of TBT on firms’ intensive and extensive margins, exit and entry probabilities, and product and market diversification. The impact on different firm sizes and for different sectors is also investigated. Results indicate a negative effect of TBT on firms’ intensive margin. The extensive margin and entry probability are negatively affected by TBT only when firm size is taken into consideration, while exit probability is positively affected. Smaller firms are more adversely affected by TBT in their export participation and entry and exit decisions. The effect of TBT on firms’ product diversification is found to be sector-dependent; positive for agricultural sectors and negative for non-agricultural ones. Finally, firms of different sizes and operating in different sectors increase their market diversification in response to TBT.

Effects of Trade Facilitation Measures in MENA: An Empirical Assessment

Nazire Nergiz Dincer
,
TED University
Ayca Tekin-Koru
,
TED University

Abstract

Trade facilitation is a framework that encompasses measures that are designed to make international trade easier by a plethora of tools ranging from eliminating administrative delays to increasing transparency, security and use of new technologies in trade. The objective of this paper is to comprehensively analyze the effectiveness of trade facilitation measures, in particular the use of authorized economic operators, on international trade in the MENA region. The originality of the paper stems from its new data which is collected through comprehensive surveys (all MENA countries) and field visits (Turkey and Jordan). The paper assesses the advantages for the different stakeholders such as the government, customs and the private sector. Furthermore, the paper sheds light on the importance of AEO for the supply chain security and facilitation of trade for small and medium enterprises. The results are preliminary.

Firm Level Analysis of Intra-MENA Trade

Ayhab Saad
,
Doha Institute for Graduate Studies

Abstract

This paper develops multi-country multi-product firm general equilibrium model of trade to quantify export costs for manufacturer exporters in Egypt. I divide trade costs into iceberg trade costs and fixed costs of export by firm, product, and destination. In so doing, this paper is an attempt to explain low intra-MENA trade by quantifying barriers facing Egyptian exporters to MENA countries. In addition, decomposing export sales into extensive and intensive margin is useful to uncover the causes of low-intra MENA trade.

External Wealth of Arab Nations: Estimates of Net Foreign Assets and Liabilities of Two Decades

Mahmoud Mohieldin
,
World Bank
Ahmed Rostom
,
George Washington University
Chahir Zaki
,
Cairo University

Abstract

In the last two decades, the global economic cycles was coupled with remarkable dynamics in cross border holdings of foreign assets. This reflected on altering the structure and composition of flows of foreign direct investment (FDI) and portfolio flows to emerging economies. Moreover, the recent downturn in oil prices has severely affected the realized surpluses by resource rich countries particularly GCC that suffered a significant deterioration in its fiscal balances. Fiscal accounts have swung from a surplus equivalent to 3.8% of GDP in 2014 to a deficit projected at $147 billion (10% of GDP) in 2015 and $162 billion (7% of GDP) in 2016 (IIF 2016). In the absence of flexible exchange rates, oil revenues in local currency terms have come down sharply. On the other hand, Arab countries – for example Egypt and Tunisia - undergone political and social transformation has lost investors interests as political uncertainties overshadow investment opportunities. This gave rise to the emergence of large external imbalances in Arab countries and revived the interest in analyzing the pattern and assessing the adjustment mechanism as well as the dual role played by exchange rate regimes in influencing both net capital flows and net capital gains on external holdings in Arab countries.
Many Arab states have earned substantially larger oil and gas revenues relative to their import needs since the oil boom in mid 1970s. Consequently, their foreign asset accumulations have been far more substantial than those of mid-size oil-exporting countries such as Iran, Algeria, and others. Never the less, the recent political and social unrest in many Arab Spring countries reflected on increased volume of fiscal spending and a drop in private investment leading to many imbalances.
JEL Classifications
  • F1 - Trade
  • F2 - International Factor Movements and International Business