Recently, it is observed that current account surplus in oil exporting countries have been rising with the help of peaking oil prices. Expansionary monetary policies of major central banks boosting the speculation on commodity prices, political turmoil in Middle East region which is called the “Arab Spring,” and most importantly rising energy demand in the world economy due to high average growth rates of developing countries are argued to be the main reasons for the rising oil prices. This study aims to clarify the global stance of oil prices examining causes and how this affects Middle East economies (MEEs) separately from the rest of the world. The focus of the study will be on the demand pull factors for the rise in oil prices. As for causes, Chinese and Indian economic growth levels are examined since the oil demand of these countries constitutes a crucial ratio of the world oil demand. As for effects, the rise in oil price brings about a trade surplus which contributes to the growth of MEEs. Shortly, this study investigates whether there is a transmission mechanism from South and East Asia to MEEs via oil prices. For the time series analysis, Pesaran et al. (2001) bounds testing are used. Empirical findings confirm the link towards MEEs.
The Hashemite Kingdom of Jordan, more commonly known as Jordan, resides on the East Bank of the River Jordan. It is one of the more stable nations in the Middle East and is experiencing a general trend of economic growth despite the Arab Spring, a whirlwind of uprisings taking place in Arab countries in Jordan’s general vicinity. This study takes a closer look at Jordan’s some of Jordan’s closest neighbors in order to analyze their relationships with Jordan, the effects of those relationships, and the resulting implications for firms considering investing in Jordan.
This paper uses Synthetic Control Methodology to estimate the output loss in Tunisia as a result of the “ArabSpring.” The results suggest that the loss was 5.5 percent, 5.1 percent, and 6.4 percent of GDP in 2011, 2012, and 2013 respectively. These findings are robust to a series of tests, including placebo tests, and are consistent with those from an Autoregressive Distributed Lag Model of Tunisia’s economic growth. Moreover, this paper finds that investment was the main channel through which the economy was adversely impacted by the Arab Spring.
This paper empirically investigates the relationship between corruption, political instability and economic growth. We first show how these variables interact by allowing for bidirectional causality between each two of the three variables for which we employ a panel VAR model on a dataset of 140 countries over the period of 1990-2017. Then, we exploit the incidence of the Arab Spring, as an exogenous shock, to measure the short-term effects of political shocks on corruption levels, political stability and economic growth using the differences-in-differences (DiD) framework.
The paper examines whether the Arab Spring phenomenon was predictable by complete elimination in the dispersion of core demands for better governance, more jobs and stable consumer prices. A methodological innovation of the Generalized Methods of Moments is employed to assess the feasibility and timing of the revolution. The empirical evidence reveals that from a projection date of 2007, the Arab Spring was foreseeable between 2011 and 2012. The paper contributes at the same time to the empirics of predicting revolutions and the scarce literature on modeling the future of socio-economic events. Caveats and cautions are discussed.
Since the onset of the Arab Spring, economic uncertainty in Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen (Arab Countries in Transition, ACTs) has slowed already sluggish growth; worsened unemployment, particularly of youth; undermined business confidence, affected tourist arrivals, and depressed domestic and foreign direct investment. Furthermore, political and social tensions have constrained reform efforts. Assessing policy options as presented in the voluminous literature on the Arab Spring and based on cross-country experience, this paper concludes that sustainable and inclusive growth calls for a two pronged approach: short term measures that revive growth momentum and partially allay popular concerns; complemented with efforts to adjust the public’s expectations and prepare the ground for structural reforms that will deliver the desired longer tem performance.
Over the past two years, ongoing political transitions in many Arab countries have led to social unrest and an economic downturn. This paper examines comparable historical episodes of political instability to derive implications for the near- and medium-term economic outlook in the Arab countries in transition. In general, past episodes of political instability were characterized by a sharp deterioration in macroeconomic outcomes and a sluggish recovery over the medium term. Recent economic developments in the Arab countries in transition seem to be unfolding along similar lines, although the weak external environment and large fiscal vulnerabilities could result in a prolonged slump.
Between 2002 and 2010, foreign direct investment (“FDI”) exploded in the Gulf Cooperation Council (“GCC”). Between 2002 and 2008 alone, FDI in the GCC increased over 3800%, outpacing both the developed and developing world by a significant margin. Although recent data suggests that FDI has declined in the GCC since 2010, scholars have yet to proffer nuanced analyses of the upsurge in FDI between 2002 and 2010. In general, the literature has not adequately examined the relatively dramatic increase in FDI in the GCC insofar as it has focused on pre-2002 data, failed to distinguish between FDI trends in the GCC and those in the wider Middle East and North Africa (“MENA”) region, ascribed the increased levels of FDI in the GCC solely to the rise in the price of crude oil, or examined post-2002 increases and decreases in FDI within unrepresentative contexts. More importantly, scholars have yet to examine whether the increase in FDI has facilitated economic growth in the GCC since 2002.
Relying on information from the United Nations Conference on Trade and Development, the World Bank, and, where available, GCC countries themselves, this Article introduces statistical evidence into the scholarly debate on FDI in the GCC and the broader MENA region, revealing the dramatic upsurge in FDI in the GCC between 2002 and 2010 in comparison to global and regional trends. This Article also examines the general legal frameworks governing FDI regimes in the GCC, demonstrating the unique manner in which GCC states have implemented liberal macroeconomic policies while simultaneously maintaining regulatory control over strategic elements of their FDI regimes. Finally, this Article contributes to the ongoing scholarly debate surrounding the relationship between FDI and economic growth by examining the impact that the increased levels of FDI have had on economic growth in GCC economies. Based on the available data, the statistical correlation between the dramatic increases in FDI and short-term economic growth in the GCC is minimal. The data suggests a stronger link between FDI and long-term economic growth in the GCC, although a definitive assessment requires a more nuanced statistical analysis. Thus, even if FDI levels had not declined after 2010, the data suggests that GCC states — and, by implication, other MENA states — ought to exercise restraint in assuming that increased levels of FDI translate into increased economic growth, at least in the short term. The findings herein are timely for other resource-rich, non-GCC states in the MENA region, particularly post-Arab spring democracies, as they reconsider traditional approaches to FDI in their efforts to foster economic development without surrendering regulatory control over strategic elements of state sovereignty.
For the last two decades, the 11 countries of the Southern Mediterranean (Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Occupied Palestinian Territory, Syria, Tunisia and Turkey) have recorded the highest growth rates in inbound world tourism, with domestic tourism increasing rapidly too. The economic performance of tourism in the ‘MED 11’ has been astonishing, given the security risks, natural disasters, oil prices rises and economic uncertainties in the region and the recent financial crisis. This trend came to an abrupt halt in early 2011 during the Arab Spring, but could well resume when the situation stabilizes.
This MEDPRO Report looks at whether this trend will continue up to 2030, and provides four different possible scenarios for the development of the tourism sector in MED 11 for 2030: i) reference scenario, ii) common sustainable development scenario, iii) polarized (regional) development scenario and iv) failed development (decline and conflict) scenario. In all cases, international and domestic tourism arrivals will increase. However, two main factors will continue to influence the development of the tourism sector in the MED 11 countries: security and adjustment to climate change.