The authors acknowledge with gratitude grant assistance provided to a larger research program by the Forum Euroméditerranéen des Instituts de Sciences Économiques (FEMISE). They also acknowledge the Fondation pour les Etudes et Recherches sur le Développement International (FERDI) for its support, as well as anonymous referees who provided valuable comments on the initial version of the document. The views expressed in this paper are those of the authors and do not represent those of the IMF or IMF policy.
FIRM PRODUCTIVITY AND INVESTMENT CLIMATE IN DEVELOPING COUNTRIES: HOW DOES MIDDLE EAST AND NORTH AFRICA MANUFACTURING PERFORM?
Article first published online: 22 NOV 2011
© 2011 The Authors. The Developing Economies © 2011 Institute of Developing Economies
The Developing Economies
Volume 49, Issue 4, pages 429–462, December 2011
How to Cite
KINDA, T., PLANE, P. and VÉGANZONÈS-VAROUDAKIS, M.-A. (2011), FIRM PRODUCTIVITY AND INVESTMENT CLIMATE IN DEVELOPING COUNTRIES: HOW DOES MIDDLE EAST AND NORTH AFRICA MANUFACTURING PERFORM?. The Developing Economies, 49: 429–462. doi: 10.1111/j.1746-1049.2011.00146.x
- Issue published online: 22 NOV 2011
- Article first published online: 22 NOV 2011
- First version received December 2010; final version accepted June 2011
- Manufacturing firms;
- Investment climate;
- Developing countries;
- Middle East and North Africa (MENA)
Firm productive performances in five Middle East and North African (MENA) economies and eight manufacturing industries are compared to those in 17 other developing countries. Although the broad picture hides some heterogeneity, enterprises in MENA often performed inadequately given the middle-income status of the MENA economies, with the exception of Morocco and, to some extent, Saudi Arabia. Firm competitiveness is a more constant constraint, with a unit labor cost higher than in most competitor countries, as well as investment climate (IC) deficiencies. The empirical analysis also points out how IC matters for firm productivity through the quality of infrastructure, the experience and education of the labor force, the cost and access to financing, and different dimensions of the government–business relationship. These findings bear important policy implications by showing which dimensions of the IC, in which industry, could help manufacturing in MENA to be more competitive in the globalization context.