IDEAS home Printed from https://ideas.repec.org/p/cdi/wpaper/947.html
   My bibliography  Save this paper

What Types of Perceived Governance Indicators Matter the Most for Private Investment in Middle East and North Africa

Author

Listed:
  • Marie-Ange VEGANZONES-VAROUDAKIS

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Ahmet Faruk AYSAN
  • Zeynep ERSOY

Abstract

By using a simultaneous equations model, this paper establishes that the perceived quality of governance, which is measured by three different indicators “Quality of Administration”, “Public Accountability” and “Political Stability”, has a positive effect on the private investment decisions in the developing countries. Our model allows us to point out the fact that the mechanisms through which each type of indicator affects private investment are different. In addition to our primary result we also show that Middle East and North Africa (MENA) region could have attained a better private investment performance if it had reached a more advanced level of perceived institutions in last two decades. The low level of public accountability, among other governance deficiencies, was predominantly responsible for the deficiency in private investment in MENA.

Suggested Citation

  • Marie-Ange VEGANZONES-VAROUDAKIS & Ahmet Faruk AYSAN & Zeynep ERSOY, 2008. "What Types of Perceived Governance Indicators Matter the Most for Private Investment in Middle East and North Africa," Working Papers 200802, CERDI.
    • Handle: RePEc:cdi:wpaper:947
    as

    Download full text from publisher

    File URL: http://publi.cerdi.org/ed/2008/2008.02.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Shafik, Nemat & Shafik, Nemat, 1992. "Modeling private investment in Egypt," Journal of Development Economics, Elsevier, vol. 39(2), pages 263-277, October.
    2. R. Nagaraj & A. Varoudakis & M.-A. Véganzonès, 2000. "Long-run growth trends and convergence across Indian States," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(1), pages 45-70.
    3. Rodrik, Dani, 1991. "Policy uncertainty and private investment in developing countries," Journal of Development Economics, Elsevier, vol. 36(2), pages 229-242, October.
    4. Ahmet Aysan & Gaobo Pang & Marie-Ange Veganzones-Varoudakis, 2009. "Uncertainty, economic reforms and private investment in the Middle East and North Africa," Applied Economics, Taylor & Francis Journals, vol. 41(11), pages 1379-1395.
    5. Ahmet Faruk AYSAN & Mustapha Kamel NABLI & Marie‐Ange VÉGANZONÈS‐VAROUDAKIS, 2007. "Governance Institutions And Private Investment: An Application To The Middle East And North Africa," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 339-377, September.
    6. Anonymous, 1963. "International Monetary Fund," International Organization, Cambridge University Press, vol. 17(2), pages 500-504, April.
    7. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross‐Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    8. Anonymous, 1963. "International Monetary Fund," International Organization, Cambridge University Press, vol. 17(4), pages 976-977, October.
    9. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    10. Aysan, Ahmet Faruk & Nabli, Mustapha Kamel & Veganzones-Varoudakis, Marie-Ange, 2006. "Governance and private investment in the Middle East and North Africa," Policy Research Working Paper Series 3934, The World Bank.
    11. Amer Bisat & Mr. Mohamed A. El-Erian & Mr. Mahmoud El-Gamal & Mr. Francesco P Mongelli, 1996. "Investment and Growth in the Middle East and North Africa," IMF Working Papers 1996/124, International Monetary Fund.
    12. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
    13. Oded Galor & Omer Moav & Dietrich Vollrath, 2009. "Inequality in Landownership, the Emergence of Human-Capital Promoting Institutions, and the Great Divergence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 143-179.
    14. Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
    15. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    16. Anonymous, 1963. "International Monetary Fund," International Organization, Cambridge University Press, vol. 17(1), pages 281-282, January.
    17. Rodriguez, Francisco & Sachs, Jeffrey D, 1999. "Why Do Resource-Abundant Economies Grow More Slowly?," Journal of Economic Growth, Springer, vol. 4(3), pages 277-303, September.
    18. Mustapha Kamel Nabli & Marie-Ange Véganzonès-Varoudakis, 2007. "Reform complementarities and economic growth in the Middle East and North Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(1), pages 17-54.
    19. Marie-Ange Véganzonès-Varoudakis & A. Aysan & M.K. Nabli, 2007. "Governance, Institutions, and Private Investment," Post-Print hal-00204786, HAL.
    20. Mr. Andrew Berg & Anne O. Krueger, 2003. "Trade, Growth, and Poverty: A Selective Survey," IMF Working Papers 2003/030, International Monetary Fund.
    21. Shigeru Otsubo, 2002. "Working Paper 61 - Linking Africa to a Changing World," Working Paper Series 195, African Development Bank.
    22. Oded Galor & Omer Moav & Dietrich Vollrath, 2005. "Land Inequality and the Emergence of Human Capital Promoting Institutions," Development and Comp Systems 0502018, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dalila Chenaf-Nicet, 2020. "Dynamics of Structural Change in a Globalized World: What Is the Role Played by Institutions in the Case of Sub-Saharan African Countries?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(4), pages 998-1037, September.
    2. Burak Byükoglu & Ahmet Šit & Ibrahim Halil Ekši, 2021. "Governance matters on non-performing loans: Evidence from emerging markets," PSL Quarterly Review, Economia civile, vol. 74(296), pages 75-91.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ahmet Faruk Aysan & …mer Faruk Baykal & Marie-Ange Véganzonès–Varoudakis, 2011. "The Effects of Convergence in Governance on Capital Accumulation in the Black Sea Economic Cooperation Countries," Chapters, in: Mehmet Ugur & David Sunderland (ed.), Does Economic Governance Matter?, chapter 6, Edward Elgar Publishing.
    2. repec:ebl:ecbull:v:5:y:2007:i:8:p:1-16 is not listed on IDEAS
    3. Ahmet Faruk AYSAN & Mustapha Kamel NABLI & Marie‐Ange VÉGANZONÈS‐VAROUDAKIS, 2007. "Governance Institutions And Private Investment: An Application To The Middle East And North Africa," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 339-377, September.
    4. Aysan, Ahmet Faruk & Nabli, Mustapha Kamel & Veganzones-Varoudakis, Marie-Ange, 2006. "Governance and private investment in the Middle East and North Africa," Policy Research Working Paper Series 3934, The World Bank.
    5. Ahmet Faruk Aysan & Zeynep Ersoy & M-A Veganzones-Varoudakis, 2007. "Does the Perception of Governance Institutions Matter for Private Investment: The Case of Middle East and North Africa," Working Papers 2007/03, Bogazici University, Department of Economics.
    6. Mustapha Kamel Nabli, 2007. "Breaking the Barriers to Higher Economic Growth : Better Governance and Deeper Reforms in the Middle East and North Africa," World Bank Publications - Books, The World Bank Group, number 6914.
    7. Tidiane Kinda & Patrick Plane & Marie‐Ange Véganzonès‐Varoudakis, 2011. "Firm Productivity And Investment Climate In Developing Countries: How Does Middle East And North Africa Manufacturing Perform?," The Developing Economies, Institute of Developing Economies, vol. 49(4), pages 429-462, December.
    8. Tidiane KINDA & Patrick PLANE & Marie-Ange VEGANZONES-VAROUDAKIS, 2008. "Firm-Level Productivity and Technical Efficiency in MENA Manufacturing Industry: The Role of the Investment Climate," Working Papers 200819, CERDI.
    9. Ahmet Faruk Aysan & M-A Veganzones-Varoudakis, 2007. "How Do Political and Governance Institutions Affect Private Investment Decisions? An Application to the Middle East and North Africa," Working Papers 2007/05, Bogazici University, Department of Economics.
    10. Tidiane Kinda & Patrick Plane & Marie-Ange Veganzones-Varoudakis, 2009. "Productivity and Investment Climate in Developing Countries: How Do MENA Industries Perform?," Working Papers 476, Economic Research Forum, revised Mar 2009.
    11. Dalila Chenaf-Nicet, 2020. "Dynamics of Structural Change in a Globalized World: What Is the Role Played by Institutions in the Case of Sub-Saharan African Countries?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(4), pages 998-1037, September.
    12. Ahmet Faruk Aysan & Mustapha Kamel Nabli & Marie-Ange Véganzonès–Varoudakis, 2008. "The Role of Governance Institutions in Private Investment Decisions: The Case of Middle East and North Africa," Working Papers 384, Economic Research Forum, revised 01 Jan 2008.
    13. Kinda, Tidiane & Plane, Patrick & Veganzones-Varoudakis, Marie-Ange, 2009. "Firms'productive performance and the investment climate in developing economies : an application to MENA manufacturing," Policy Research Working Paper Series 4869, The World Bank.
    14. Takuma Kunieda & Masashi Takahashi, 2022. "Inequality and institutional quality in a growth model," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 189-213, April.
    15. Areendam Chanda & Louis Putterman, 2007. "Early Starts, Reversals and Catch‐up in the Process of Economic Development," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(2), pages 387-413, June.
    16. Harrison, Ann E. & Lin, Justin Yifu & Xu, Lixin Colin, 2014. "Explaining Africa’s (Dis)advantage," World Development, Elsevier, vol. 63(C), pages 59-77.
    17. Rougier, Eric, 2016. "“Fire in Cairo”: Authoritarian–Redistributive Social Contracts, Structural Change, and the Arab Spring," World Development, Elsevier, vol. 78(C), pages 148-171.
    18. Thibaut Dort & Pierre-Guillaume Méon & Khalid Sekkat, 2014. "Does investment spur growth everywhere? Not where institutions are weak," Post-Print CEB, ULB -- Universite Libre de Bruxelles, vol. 67(4), pages 482-505, October.
    19. Rabah Arezki & Frederick van der Ploeg, 2011. "Do Natural Resources Depress Income Per Capita?," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 504-521, August.
    20. Rafael Di Tella & Robert MacCulloch, 2009. "Why Doesn't Capitalism Flow to Poor Countries?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 285-332.
    21. Mark Dincecco & Mauricio Prado, 2012. "Warfare, fiscal capacity, and performance," Journal of Economic Growth, Springer, vol. 17(3), pages 171-203, September.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdi:wpaper:947. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vincent Mazenod (email available below). General contact details of provider: https://edirc.repec.org/data/ceauvfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.