Mustapha K. Nabli’s research while affiliated with World Bank and other places

This paper takes stock of the economic performance of resource rich countries in the Middle East and North Africa (MENA) over the past forty years. While those countries have maintained high levels of income per capita, they have performed poorly when going beyond the assessment based on standard income level measures. Resource rich countries in MENA have experienced relatively low and non inclusive economic growth as well as high levels of macroeconomic volatility. Important improvements in health and education have taken place but the quality of the provision of public goods and services remains an important source of concerns. Looking forward we argue that the success of economic reforms in MENA rests on the ability of those countries to invest boldly in building inclusive institutions as well as high levels of human capacity in public administrations.

Jennifer Keller is an economist in the Middle East North Africa Region of the World Bank. Mustapha K. Nabli is Chief Economist of the Middle East and North Africa Region of the World Bank. The authors are grateful to Sebastien Dessus, Dipak Dasgupta, and Marie-Ange Veganzones for their comments and suggestions. Views expressed here do not necessarily reflect those of the World Bank, its executive directors, or the countries they represent. The Macroeconomics Of Labor Market Outcomes In MENA Over The 1990s: How Growth Has Failed To Keep Pace With A Burgeoning Labor Market?

This paper provides a review of empirical knowledge about income inequality in the Arab region, focusing primarily on the issues of data and measurement, and the characterization of its patterns and trends. The review shows good progress in the availability of data and quality of measurement. However, the region remains far behind progress being achieved worldwide in terms of coverage and comparability across countries, improvements in quality and content of data, and, more importantly, accessibility of available micro-data to scholars. Within these data constraints and limitations, the available evidence shows moderately high levels of inequality in terms of household expenditure compared to other regions of the world. The patterns of inequality show quite significant variation across countries. One striking result is the weak time variability of the inequality indexes in most of the countries of the region. Alternative measures of welfare distribution such as of horizontal inequality, polarization or inequality of opportunity have been widely used worldwide to supplement the Lorentz-based inequality criteria, but such measures are very scarce in Arab countries. We finally offer suggestions for a research agenda to better our understanding about the nature and determinants of inequality in the region.

Democracy is valued in itself. The extent to which a citizen is able to live in an open society and participate in its democratic process directly affects his/her wellbeing. But democracy can also affect welfare indirectly through its effects on other aspects of the social and economic interactions that influence the wellbeing of people. Democracy can often positively affect the relative rights of social groups, such as gender-specific groups or minorities. In the economic area democracy may affect the distribution of income, with democracies, for instance, tending to pay higher wages and improve human capital. It may also affect the volatility of incomes, with democracies tending to produce fewer recessions and affect the economic rate of growth. Nobel Prize Laureate Amartya Sen observes that famines never occurred under democratic regimes.

The analysis in this paper helps understand the progress in reforms and development of the private sector in the Middle East and North Africa. It shows the critical role played by the state-private sector relations in determining the progress of reforms and their impact on private sector development. The authoritarian nature of the political regimes and the existence of large oil and other rents, and conflict to a much lesser extent, have been the major factors which shaped the nature, extent and speed of reforms. Classification JEL : D78, N45, O43, O53

Both institutional quality and institutional stability have been argued to stimulate economic growth. But to improve institutional quality, a country must endure a period of institutional change, which implies at least a little and possibly a lot of institutional instability. We investigate the growth effects of institutional quality and instability, using the political risk index from the ICRG in a cross-country study of 132 countries, measuring instability as the coefficient of variation. Using the aggregate index, we find evidence that institutional quality is positively linked to growth. While institutional instability is negatively related to growth in the baseline case, there are indications that the effect can be positive in rich countries, suggesting that institutional reform is not necessarily costly even during a transition period. Sensitivity analysis, e.g., decomposing the political risk index by using both its constituting components and the results of a principal components analysis, using other measures of institutional quality and excluding outliers, confirm the general results, with qualifications.

This paper investigates the link between private investment decisions and various governance institutions in the form of corruption, quality of bureaucracy, judiciary, security of property rights, regulations and taxation, political stability, as well as political rights and civil liberties. This link is empirically tested for a panel of 32 countries by estimating a simultaneous model of private investment and governance institutions, where economic policy and other variables explain concurrently both variables. This empirical model also illustrates that economic reforms -- in the form of financial development and trade openness -- and human capital affect private investment decisions in two ways; directly, as well as through their positive impact on the quality of governance institutions. In MENA, deficient administration quality, political instability and low public accountability contributed significantly to the low investment decisions of the 1980s and the 1990s. Our empirical analysis also confirms that structural reforms constitute another challenge, if the region wants to catch up with more successful developing economies.