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Reform complementarities and economic growth in the Middle East and North Africa†
Article first published online: 24 MAY 2006
Copyright © 2006 John Wiley & Sons, Ltd.
Journal of International Development
Volume 19, Issue 1, pages 17–54, January 2007
How to Cite
Nabli, M. K. and Véganzonès-Varoudakis, M.-A. (2007), Reform complementarities and economic growth in the Middle East and North Africa. J. Int. Dev., 19: 17–54. doi: 10.1002/jid.1286
- Issue published online: 26 DEC 2006
- Article first published online: 24 MAY 2006
- economic reform;
- economic growth;
- Middle East and North Africa
In this paper we empirically analyse the linkages amongst economic reforms, human capital, physical infrastructure, and growth for a panel of 44 developing countries over 1970–1980 to 1999. For this purpose, we generate aggregated reform indicators using principal component analysis. We show that the growth performance of Middle East and North Africa (MENA) has been disappointing because these economies have lagged behind in terms of economic reforms. However, our analysis also reveals that the growth dividend of some reforms has been small. This is the case when structural reforms are implemented in an unstable macroeconomic environment (which corresponds to the situation of the MENA countries in the 1980s), and when macroeconomic reforms are accompanied by a low level of structural reforms (as observed during the 1990s). Our result illustrates the complementarities between reforms as modelled by Mussa (1987) and Williamson (1994). Actually, after human capital and physical infrastructure, our analysis finds that macroeconomic and external stability are key variables for the reform process and for the growth prospects of the developing world. Copyright © 2006 John Wiley & Sons, Ltd.