Band 5, Heft 3

Comparing the pace and extent of economic development across the developing regions yields that Arab countries have displaced a weak economic performance over the past 20 years, despite their favorable geo-strategic location and a high density of national and international structural adjustment efforts. Using cross-country regressions, this paper identifies two binding constraints to economic development in the Arab countries of the Middle East and North Africa (MENA): 1) Most countries are not able to apply or adopt existing technologies efficiently and 2) The economically inefficient allocation of resources is rooted deeply in regional political economy structures. These results challenge the scholarly debate, but can help to understand why international structural adjustment programs that focused on privatization and trade liberalization only showed limited success in the MENA region.

We use the CGE analysis to provide an assessment of the way an oil exporting LDC is affected by a positive exogenous shock due to the rise in the price of oil. Our main purpose is to examine how the effects differ under fixed and flexible exchange rate regimes; it is desirable, from a short-run policy point of view, if a situation could be identified in which the benefits accrued from the higher oil price lead to a rise in households' and government's consumption as well as to a considerably higher level of investment.We carry out the study for Libya which, in the light of its recent reforms, presents itself as an interesting case. We construct a social accounting matrix for the country for the year 2000 and use it to calibrate and simulate a CGE model that is sufficiently detailed to capture the main aspects of the economy. Our simulations are carried out on the assumption that market forces play the equilibrating role and our results suggest that on the whole a flexible exchange rate allows for a better economic performance, and the constancy of the saving ratio is crucial for generating the desirable situation mentioned above.

The objective of this paper is to assess the trade performance of the Gulf Cooperation Council (GCC) countries as a regional trade arrangement and estimate the trade potential of the GCC with countries or groups of countries with which a preferential trade agreement is signed or still in negotiation. The study uses disaggregated data and estimate gravity equations for total exports, total agri-food exports and seven agri-food commodities according to the SITC classification, covering the period 1994-2004. Results indicate that the GCC as a regional trade arrangement has actually promoted trade integration significantly between the member countries in agri-food products as opposed to total aggregate trade. Trade integration is highest in dairy products where GCC intra-trade is 10 times more than what would be predicted by the basic model, followed by meat, fish, and cereal products. The GCC intra-trade did not seem however to change significantly over the years and had probably reached its full potential during the 1993-1996 period. The newly created GCC Custom Union is therefore promising enhancing new opportunities of trade as it goes beyond the removal of tariffs to the elimination of non tariff barriers. Except with the Mashreq countries, trade of GCC with other regional groups and sub-groups is less than expected in all commodities suggesting that there is untapped trade potential which can be enhanced by negotiating a freer trade arrangement between these groups and the GCC region.

The Capital Asset Pricing Model (CAPM) has dominated finance theory for over 30 years; it suggests that the market beta alone is sufficient to explain security returns. However, evidence shows that the cross-section of stock returns cannot be described solely by the one-factor CAPM. Alternative studies have been proposed in response to the poor performance of the standard CAPM. The main contribution of this paper is to offer to investors planning to invest the appropriate model for estimating the cost of equity in the Tunisian market. The paper allows choosing among the CAPM, the Fama&French asset-pricing model (TPFM), and the Four Factor Pricing Model (FFPM), which adds a third and fourth moment to estimate the cost of equity of firms listed on the Tunisian stock market. In addition to the classic, the selection of the best model is based on information criteria: the Akaike Information Criteria (AIC) and the Schwartz Information Criteria (SIC). The simple FFPM of Cahart proved to be the selected model.

Previous studies conclude that bank ownership in developed markets improves firms' performance while in large emerging markets it promotes firm access to bank loans and lowers performance. We examine the effect of bank ownership on firms' performance and their access to bank loans in Egypt. We also look at the factors that affect bank presence in a firm. Our study finds that bank ownership in a firm improves its financial performance and lowers its access to bank loans. We show that banks in Egypt are not likely to cherry pick the best performance firms. Our results find that banks prefer to own equity in firms with better financial performance, lower debt, and higher collateral assets. Additionally, public ownership concentration hurts performance and discourages banks ownership.