Manufactured Exports and FDI in the MED-11 Countries: Recent Evolution, Determinants and Prospects

This paper investigates the evolution and determinants of manufactured exports and FDI in MED-11 countries over the period 1985-2009 as well as the prospects of their evolution under different scenarios pertaining to the evolution of the determinants. The econometric analysis confirmed the role of exchange rate depreciation, the openness of the economy and the quality of institution and infrastructure in fostering manufactured exports and FDI inflows in the Region. The prospects’ assessment suggested that a scenario of deeper integration with the EU entails superior performance regarding manufactured exports and FDI than status quo or less integration with the EU but greater regional integration.Manufactured Exports, FDI, Institutions, MENA

Exchange Rate Undervaluation to Foster Manufactured Exports: A Deliberate Strategy?

Recent literature suggests that a proactive strategy consisting of deliberate real exchange rate depreciation can promote exports diversification and growth. This paper is built on these recent developments and investigates whether four developing countries have adopted such a strategy. Data from Egypt, Jordan, Morocco and Tunisia are used to construct and compare the macroeconomic Real Effective exchange rate (REER), similar exchange rates at the sector level (SREER) and the macroeconomic Equilibrium Real Effective exchange rate (EREER). It shows that there are instances where the objective of diversifying exports through depreciation of exchange rate comes at the expense of further misalignment (REER departs from the EREER) and, then, monetary authorities are doomed to choose. The results show that Morocco and Tunisia are choosing the proactive exchange rate strategy while Egypt and Jordan are not. This fits with the observation that the former are doing much better than the latter in terms of exports diversification.Exchange rate, Misalignment, Undervaluation, Exports diversification

Trade and Foreign Exchange Liberalization,Investment Climate, and FDI in the MENA Countries

Despite some progress in economic policy – in macroeconomic stability in the 1980s, and in structural reforms in the 1990s – the MENA countries have failed to attract foreign direct investments (FDI). This may be due to several factors. In this paper we empirically verify from a panel of 72 countries – among which are 8 MENA economies – that, during the 1990s, the low level of trade and foreign exchange liberalization compared to East Asia and Latin America played a determinant role in the low level of total FDI in the MENA economies, particularly in manufacturing. The paper also highlights the role of other factors, such as physical infrastructure, political environment and macroeconomic conditions, in explaining total FDI flows to the different regions. These results stress the importance of accelerating the pace of reform in the MENA economies.

Exchange Rate Undervaluation and Manufactured Exports: A Deliberate Strategy?

Recent literature suggests that a proactive exchange rate policy in accordance with price incentives (i.e. undervaluation) can foster manufactured exports and growth. This paper is built on these recent developments and investigates, using a sample of 52 developing countries, whether such a proactive exchange rate policy is adopted. The results show that during the period 1991-2005 a number of countries has used undervaluation to foster the price competitiveness of manufactured exports.Exchange rate, Misalignment, Undervaluation, Exports diversification

Progressive Taxation, Macroeconomic Stabilization and efficiency in Europe

The paper contributes to the debate on the stability/efficiency tradeoff of automatic stabilizers. A simple AD-AS two-country model is presented and illustrates circumstances where a reduction in taxes can foster stabilization. The testable implication from the model is that tax cuts can either increase or decrease volatility depending on the structure of the taxation system. Hence, lowering taxes for efficiency purposes may have not cost in terms of stabilization. This implication is tested for OECD countries over the period 1960-2000 taking account of the endogeneity and omitted variables issues identified in the literature. We found acceptably robust evidence that the size of governments in OECD countries has played a stabilizing role for both output and inflation. However, the relationship between government size and macroeconomic stability is not linear. The composition of public finances, in particular the tax mix, matters for output and price volatility. Distorting taxes, namely taxes on labor, might have negative effects on macroeconomic stability. Consequently, the potential trade off between stability and flexibility might not exist.Automatic stabilizers, efficiency, Europe, Martinez-Mongay, Sekkat

Exchange Rate Undervaluation and Manufactured Exports: A Deliberate Strategy?

Recent literature suggests that a proactive exchange rate policy in accordance with price incentives (i.e. undervaluation) can foster manufactured exports and growth. This paper is built on these recent developments and investigates, using a sample of 52 developing countries, whether such a proactive exchange rate policy is adopted. The results show that during the period 1991-2005 a number of countries has used undervaluation to foster the price competitiveness of manufactured exports.Exchange rate;Misalignment;Undervaluation;Exports diversification

Exchange Rate Undervaluation to Foster Manufactured Exports: A Deliberate Strategy?

Recent literature suggests that a proactive strategy consisting of deliberate real exchange rate depreciation can promote exports diversification and growth. This paper is built on these recent developments and investigates whether four developing countries have adopted such a strategy. Data from Egypt, Jordan, Morocco and Tunisia are used to construct and compare the macroeconomic Real Effective exchange rate (REER), similar exchange rates at the sector level (SREER) and the macroeconomic Equilibrium Real Effective exchange rate (EREER). It shows that there are instances where the objective of diversifying exports through depreciation of exchange rate comes at the expense of further misalignment (REER departs from the EREER) and, then, monetary authorities are doomed to choose. The results show that Morocco and Tunisia are choosing the proactive exchange rate strategy while Egypt and Jordan are not. This fits with the observation that the former are doing much better than the latter in terms of exports diversification.Exchange rate;Misalignment;Undervaluation;Exports diversification

Manufactured Exports and FDI in Southern Mediterranean Countries: Evolution, determinants and prospects. MEDPRO Technical Report No. 14/April 2012

This paper investigates the evolution and determinants of manufactured exports and foreign direct investment (FDI) in 11 southern Mediterranean countries over the period 1985–2009, as well as their prospects under different scenarios pertaining to the development of the determinants. The econometric analysis confirms the role of exchange rate depreciation, the openness of the economy and the quality of institutions and infrastructure in fostering manufactured exports and FDI inflows in the region. The assessment of the prospects suggests that a scenario of deeper integration with the EU entails superior performance for manufactured exports and FDI compared with either the status quo or less integration with the EU but greater integration within the region

Are skilled women more migratory than skilled men?

This paper empirically studies emigration patterns of skilled males and females. In the most relevant model accounting for interdependencies between women and men’s decisions, we derive the gendered responses to traditional push factors. Females and males do not respond with the same intensity to the traditional determinants of labor mobility and gender-specific characteristics of the population at origin. Moreover, being other factors equal, the female willingness to follow the spouse seems to be much more pronounced with respect to the male one. From a quantitative perspective, our model reveals that skilled women are not more migratory than skilled men internationally, thus rejecting the existence of a genetic or social gender gap in international skilled migration.