Digitalization and Firm Performance in The Middle East and North Africa: Case Studies of Jordan, Morocco, and Egypt

Nong Zhu () and Xubei Luo ()
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Nong Zhu: Institut National de la Recherche Scientifique
Xubei Luo: The World Bank

No 1637, Working Papers from Economic Research Forum

Abstract: In a digitalizing global economy, countries that successfully harness the potential of e-commerce are better placed to take advantage of the access to regional and international markets for sustainable growth, while those that fail to do so may risk falling behind. For the Middle East and North Africa (MENA) region, digitalization of business activities is key to connect producers with customers, support the integration of regional and global value chains (GVCs), and foster the dynamism of private sector to aid productive job creation and inclusive growth. This study aims to examine the relationships between participation in e-commerce and firm performance (measured by production, productivity, export and/or import, and innovation) in MENA, with case studies in Jordan, Morocco, and Egypt. The analyses are based on an original survey at firm-level, carried out by the Economic Research Forum (ERF) in 2022, and data from the World Bank Enterprise Survey. The main findings are as follows: (i) E-commerce participation is relatively low in the three case study countries compared with regional peers or countries with similar development levels. (ii) E-commerce participation varies widely across firms with different characteristics: large firms, young firms, firms in “information and communication” sector, and firms with more educated workers are more likely to participate in e-commerce. (iii) Production is positively associated with e-commerce participation. However, among the three countries, the positive association between e-commerce participation and productivity is significant only in Jordan where e-commerce is most developed. (iv) Participation in e-commerce is also positively associated with firms’ exports and/or imports and innovation activities. (v) Depending on the level of e-commerce development and the structural characteristics, the role of the difference in the attributes between e-firms and non-efirms and the difference in the returns to these attributes in firm performance may vary. (vi) Firms involved in e-commerce are performing better than other firms during the COVID-19 pandemic. Overall, our study finds that e-commerce is positively associated with the viability of enterprises and their ability to maintain the level of sales.

Pages: 68
Date: 2023-04-20, Revised 2023-04-20
New Economics Papers: this item is included in nep-ara, nep-bec, nep-eff, nep-ent and nep-sbm
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