Governance and Private Investment in the Middle East and North Africa

Ahmet Aysan, M.-K. Nabli and Marie-Ange Véganzonès
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M.-K. Nabli: Departement Economie - Université Bocarici

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Abstract: This paper addresses the issue of the low level of private investment in the Middle East and North Africa (MENA) region, with special emphasis on the role of governance. Based on the existing literature, we have categorized what types of governance institutions are more detrimental to entrepreneurial investments. We have then estimated a simultaneous model of private investment and governance quality where economic policies concurrently explain both variables. Our empirical results show that governance plays a significant role in private investment decisions. This result is particularly true in the case of "Administrative Quality" in the form of control of corruption, bureaucratic quality, investment-friendly profile of administration, and law and order, as well as for "Political Stability". Evidence in favor of "Public Accountability" seems, however, less robust. Our estimations also stress that structural reforms -- such as financial development and trade openness – and human development affect private investment decisions directly, and/or through their positive impact on governance. These findings bring new empirical evidence on the subject of private investment in the developing world and in MENA countries in particular.

Keywords: governance; private investment; institutions; Middle East and North Africa.; Middle East and North Africa (search for similar items in EconPapers)
Date: 2011-01-18
New Economics Papers: this item is included in nep-ara and nep-cwa
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00557250v1
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Governance and Private Investment in the Middle East and North Africa (2011)
Working Paper: Governance and Private Investment in the Middle East and North Africa (2006)
Working Paper: Governance and private investment in the Middle East and North Africa (2006)
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