Volume 12, Issue 2 -

This paper examines the micro-foundations of the relationship between political particularism, support for democracy and support for Shari’a in the Arab World. Our hypotheses suggest that particularism reduces support for democracy whilst it increases support for Shari’a since, at the individual-level, in-group (family/clan) obligations are more binding than obligations towards the state (universal). We test our hypotheses using data from the Arab Barometer. Results suggest that, even when allowing for the correlation of the error terms, particularism significantly increases support for Shari’a whilst it decreases support for democracy. Our results are robust to alternative specifications of the model and to the use of techniques aimed at addressing the potential endogeneity of particularism.

While the social conflict theory (SCT) suggests that absolute monarchies will not tolerate inclusive economic institutions, the Gulf Cooperation Council (GCC) countries have regularly achieved above global average ratings for property rights protection, entry barriers, disruptive wealth redistribution and corruption. This paper discusses the extent to which GCC states have potential to further improve their institutional quality. We explore whether inclusive economic institutions may emerge in GCC states, such as: (1) regional economic integration and competition which alleviate rulers’ capability to expropriate private property and ease entry barriers to the market, (2) rulers of resource rich economies sustain political power with control of natural resources as opposed to the extraction of private property; and (3) prospect of long-term gain for the ruler incentivizes the adoption of a market-based economy. Strong state involvement in manufacturing and the monopoly of some services, the effect of tribalism in economic affairs and the distribution of resources, as well as a sponsorship system for foreign workers in these states may all impede the development of a truly competitive and free economy.

Drawing on international trade data, this paper uses the product space approach to analyze changes in Morocco’s goods exports in 1990–2010 and future export priorities. The level and moderate growth of Morocco’s gross domestic product match the predictions of product space analysis, informed by changes in the income potential of Morocco’s export basket, reflecting relatively strong capabilities in products with a relatively low potential to contribute to income growth and diversification. Morocco’s peripheral position in the product space points to the difficulty of diversification into more sophisticated products. Encouraging changes since 1990 include the development of a revealed comparative advantage in medium- and high-tech manufactures. However, the number of goods involved is relatively small and this transformation has not sufficed to raise per capita growth to the average for middle-income countries. Among sectors, high growth is likely for phosphate-based fertilizer exports. However, phosphates are hampered by low income and diversification potentials. Along with various other manufactured products, electronics and the automotive industry are promising sectors that may offer more lasting positive contributions. Beyond goods, policy makers should also consider the potential contributions of service exports, which in recent years have enjoyed rapid growth.

Abstract With the growing number of Islamic banks worldwide, much ink has been spilled on heated debate about its merits and ability to improve the financial sector. In order to buttress the subject matter of this debate, this paper investigate the link between Islamic banking assets share and the financial development. Using five different proxies of financial development from 22 countries for the period between 2000 and 2013, this research employs the generalized method of moments to cope with the endogeneity problem, and concludes that the share of Islamic banking is positively associated with the banking sector activity as measured by private credit. The competition of banking sector intensifies in countries with higher Islamic bank shares resulting in smaller net interest margin, whereas the structure of the financial sector does not change. A financial sector index composite regression showed that in general, financial development is positively linked to the Islamic banking presence. These findings provide empirical evidence that Islamic banking presence benefits financial development in Muslim countries.