TY - JOUR
T1 - How to boost private investment in the MENA countries: The role of economic reforms
AU - Aysan, Ahmet Faruk
AU - Pang, Gaobo
AU - Véganzonès-Varoudakis, Marie Ange
PY - 2005
Y1 - 2005
N2 - This paper analyzes the determinants of unsatisfying private investment growth in the Middle East and North Africa (MENA) throughout the 1980s and 1990. In this period, private investment in MENA has, on average, shown a decreasing or stagnant trend in contrast to the rest of the world. This paper shows empirically, for a panel of 40 developing economies -- among which five MENA countries -- that in addition to the traditional determinants of investment -- such as the growth anticipations and the real interest rate -- government policies explain MENA's low investment rate. Insufficient structural reforms, represented as poor financial development and deficient trade openness, have been a crucial factor for the deficit in private capital formation. Economic uncertainties of the region have constituted a major deterrent for firms to invest. High external debt burden and economic volatility arise as primary reasons for high uncertainty in the region. These findings provide new empirical evidence on the determinants of private investment in the developing world and in MENA countries in particular.
AB - This paper analyzes the determinants of unsatisfying private investment growth in the Middle East and North Africa (MENA) throughout the 1980s and 1990. In this period, private investment in MENA has, on average, shown a decreasing or stagnant trend in contrast to the rest of the world. This paper shows empirically, for a panel of 40 developing economies -- among which five MENA countries -- that in addition to the traditional determinants of investment -- such as the growth anticipations and the real interest rate -- government policies explain MENA's low investment rate. Insufficient structural reforms, represented as poor financial development and deficient trade openness, have been a crucial factor for the deficit in private capital formation. Economic uncertainties of the region have constituted a major deterrent for firms to invest. High external debt burden and economic volatility arise as primary reasons for high uncertainty in the region. These findings provide new empirical evidence on the determinants of private investment in the developing world and in MENA countries in particular.
M3 - Article
SN - 2334-282X
JO - Topics in Middle Eastern and African Economies
JF - Topics in Middle Eastern and African Economies
ER -