Demographics in MENA Countries: A Major Driver for Economic Growth

Yeganeh Forouheshfar, Najat El Mekkaoui and Hippolyte d'Albis
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Najat El Mekkaoui: Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, LEDA-DIAL - Développement, Institutions et Modialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, PSL - Université Paris Sciences et Lettres

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Abstract: MENA region is undergoing rapid demographic transition, where 50% of the population is under the age 25 and high youth unemployment rates are argued to be one of the main sources of political instability. In this paper we evaluate the economic impact of the demographic transition for selected MENA countries, namely: Iran, Morocco and Egypt who experience different speeds of transition. We have developed a general equilibrium overlapping generations model with a cost of capital mobilisation as a proxy for financial markets' efficiency and simulated the demographic trends in each country. We find that the demographic shift will be an important driver for growth in the upcoming decades. Furthermore, our results show that a more efficient financial sector leads to better economic performance. Specifically, youth are the primary beneficiaries: an increase in the financial sector efficiency can reduce up to 8 percentage points of the the unemployment rate for the youngest age group.

Keywords: Development; MENA region; Financial efficiency; OLG model; Demographic transition (search for similar items in EconPapers)
Date: 2020-06
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Citations: View citations in EconPapers (1)

Published in Economist, 2020, 168 (2), pp.183-213. ⟨10.1007/s10645-020-09357-y⟩

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Related works:
Journal Article: Demographics in MENA Countries: A Major Driver for Economic Growth (2020)
Working Paper: Demographics in MENA Countries: A Major Driver for Economic Growth (2020)
Working Paper: Demographics in MENA countries: a major driver for economic growth (2019)
Working Paper: Demographics in MENA countries: a major driver for economic growth (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-02874757

DOI: 10.1007/s10645-020-09357-y

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