Volume 1, Issue 2

In this paper, the impact of removing all Tunisian tariffs on imports from the EU, while maintaining protection on imports from the rest of the world, is evaluated using computable general equilibrium (CGE) models. Both competitive and Cournot oligopolistic commodities market structures with and without barriers to entry and exit are considered. It is found that a free trade agreement (FTA) improves welfare in all cases, with maximum gains under oligopoly and free entry and exit. At the sectoral level, the FTA benefits different industries at the expense of agriculture and services, which are relatively intensive in primary factors of production.

This paper presents an empirical analysis of Wagner’s law in the case of Turkey over the period 1960–2000. The paper uses modern time-series econometric techniques to test the law’s proposition that in the course of economic development, government expenditures increase. The results of this study do not support the empirical validity of Wagner’s law for Turkey for the period 1960–2000. However, the paper finds statistical evidence for an augmented version of Wagner’s law.

This paper examines the effects of automation on the liquidity, volatility, returns and efficiency of shares traded on the Tunisian stock exchange (TSE). By the end of 1996, stocks listed on the TSE were transferred gradually from manual trading to automated trading. The TSE operates a continuous market for frequently traded securities and a ‘call-auction’ for infrequently traded securities. While our results show an improvement in the liquidity of shares following the automation, returns decreased and no significant effects on volatility or efficiency were detected.

This paper estimates the effects of politics and culture on Middle East trade by applying an augmented version of the gravity model. The econometric specification of the model accounts for oil-exporting countries, regional trade blocs and other pertinent exogenous factors. The model endogenously accounts for potential selection-bias between Arab and Islamic countries. Unlike past and contemporary work, this paper employs a Middle Eastern framework by incorporating politics, corruption and culture. The levels of corruption and political freedom represent politics, while language affiliation and religion capture some aspects of culture.

Using a vector autoregressive analysis, this paper investigates the dynamic interactions among stock market returns from six Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates). The empirical investigation is conducted using weekly data from 15 January 1997 to 26 April 2000. During this period, significant steps were taken that intensified financial integration in the GCC region, including privatization policies, increased liberalization of the financial markets and easier entrance of foreign investors to the stock markets. Our empirical evidence suggests the following: (1) there is substantial evidence of interdependence and feedback effects among GCC stock markets; (2) Bahrain plays a dominant role in influencing the GCC markets with a significant persistent impact beyond weeks one and two; (3) Saudi Arabia shows a slow process in responding to shocks originated in other markets; and (4) markets are not completely efficient in processing regional news, providing an opportunity for portfolio diversification at the regional level.

Globalization and the Politics of Development in the Middle East, by Clement M. Henry and Robert Springborg (Cambridge: Cambridge University Press, 2001). 258 pp., figures, tables, notes, bibliography, index, $US50.00 (hardback), ISBN 0-521-62312-X; $US20.00 (paperback), ISBN 0-521-62631-5.