Exploring Lebanon's Growth Prospects

Jean-Claude Berthélemy, Sebastien Dessus () and Charbel Nahas

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Abstract: This paper attempts to identify Lebanon's greatest constraints to economic growth, following a growth diagnosis approach. It concludes that fiscal imbalances and barriers to entry are most binding on long-term growth. Macroeconomic imbalances and related perceived risks affect the nature of investment decisions in Lebanon, in favor of liquid instruments rather than longer-term productive investments. Further, many barriers to entry discourage agents from investing in a number of markets: legal impediments to competition, corruption, and a set of fiscal incentives favoring the allocation of resources to non-tradable sectors, where potential demand and investment opportunities are scarcer. In turn, using a steady-state computable general equilibrium model, the paper assesses the long-term growth impact of a selected set of policy reforms envisaged to lift such constraints. Results suggest that 1 to 2 percentage points of additional GDP growth per year could be gained through public expenditure reform, greater domestic competition, and tax harmonization.

Keywords: growth; Lebanon (search for similar items in EconPapers)
Date: 2007
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Published in 2007

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Working Paper: Exploring Lebanon's Growth Prospects (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00305558

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