Suchergebnisse

This study examines the economic globalization and the shadow economy nexus in Egypt. Using time series data from 1976 to 2013, the impulse response analysis shows that the response of the shadow economy in Egypt to positive shocks in economic globalization is negative and statistically significant for the first three years following the shock. This finding is obtained by controlling for several intermediary channels in globalization-shadow economy nexus such as education, government spending, industrial production, and labor force participation. Our results show the importance of promoting economic globalization by reducing the costs of doing business and trade in dealing with sizable shadow economy in Egypt.

The resource curse hypothesis suggests that resource-rich countries show lower economic growth rates compared to resource-poor countries. We add to this literature by providing empirical evidence on a new transmission channel of the resource curse, namely, the negative effect of rents on the quality of education. The cross-country analysis for more than 70 countries shows a significantly positive effect of oil rents on the quantity of education measured by government spending on primary and secondary education. Hence, the underspending hypothesis championed by Gylfason (2001) no longer holds with newer data. However, we find a robust and negative effect of oil rents dependency on the current objective and subjective indicators of quality of education, controlling for a set of other drivers of education quality and regional dummies. Despite pending significant shares of GDP on education, oil-rich countries still suffer from an insuficient quality of primary and secondary education,which may hamper their growth potentials. The significant negative effect of oil rents dependency on education quality can be explained by both the demand (e.g., skill acquisition) and supply (e.g., teacher quality) side channels.

This study examines the economic globalization and the shadow economy nexus in Egypt. Using time series data from 1976 to 2013, the impulse response analysis shows that the response of the shadow economy in Egypt to positive shocks in economic globalization is negative and statistically significant for the first three years following the shock. This finding is obtained by controlling for several intermediary channels in globalization-shadow economy nexus such as education, government spending, industrial production, and labor force participation. Our results show the importance of promoting economic globalization by reducing the costs of doing business and trade in dealing with sizable shadow economy in Egypt.

The resource curse hypothesis suggests that resource-rich countries (especially oil dependent economies) show lower economic growth rates compared to resource-poor countries. We add to this literature by providing empirical evidence on a new transmission channel of the resource curse, namely, the negative long-run effect of oil rents on the quality of education. Our empirical analysis for more than 70 countries in the period of 1995-2015 shows a significantly positive effect of oil rents on the quantity of education measured by government spending on primary and secondary education. However, we find a robust and negative long-run effect of oil rents dependency on the objective and subjective indicators of quality of education, controlling for a set of other drivers of education quality and regional dummies. The significant negative effect of oil rents dependency on education quality can be explained by both the demand (e.g., skill acquisition) and supply (e.g., teacher quality) side channels.

The resource curse hypothesis suggests that resource-rich countries show lower economic growth rates compared to resource-poor countries. We add to this literature by providing empirical evidence on a new transmission channel of the resource curse, namely, the negative effect of rents on the quality of education. The cross-country analysis for more than 70 countries shows a significantly positive effect of oil rents on the quantity of education measured by government spending on primary and secondary education. Hence, the underspending hypothesis championed by Gylfason (2001) no longer holds with newer data. However, we find a robust and negative effect of oil rents dependency on the current objective and subjective indicators of quality of education, controlling for a set of other drivers of education quality and regional dummies. Despite spending significant shares of GDP on education, oil-rich countries still suffer from an insufficient quality of primary and secondary education, which may hamper their growth potentials. The significant negative effect of oil rents dependency on education quality can be explained by both the demand (e.g., skill acquisition) and supply (e.g., teacher quality) side channels.

This study shows that the relative size of the youth bulge matters for how corruption affects the internal stability of a political system. We argue that corruption cannot buy political stability (e.g., the greasing hypothesis) in countries with a relatively large youth population. Using panel data covering the 2002-2012 period for more than 100 countries, we find a negative interaction effect between the relative size of the youth population and corruption on internal political stability. Corruption is a destabilizing factor for political systems when the share of the youth population in the adult population exceeds a threshold level of approximately 19%. The negative interaction term is robust, controlling for country and year fixed effects, a set of control variables that may affect internal political stability, an alternative operationalization of youth bulge, and a dynamic panel estimation method.

We study the association between natural resource rents and internal political stability, highlighting the importance of the distribution of political power as a mediating factor. We present a simple theoretical model demonstrating that increased rents are likely to be positively associated with the internal stability of a powerful incumbent while destabilizing a less powerful incumbent. Our empirical analysis confirms this prediction. Employing panel data for more than 120 countries from the period 1984–2009, our estimation results demonstrate that resource rents can promote political stability but only when political power is sufficiently concentrated. Indeed, if the incumbent is sufficiently weak, rents fuel instability. Our main results hold when we control for the effects of income, quality of institutions (rule of law, democratic accountability and corruption), persistence of political stability, time-varying common shocks, country fixed effects, possible endogeneity of rents and power balance to political stability, and various additional covariates. Our analysis departs from the existing literature by emphasizing not (only) the type of government, but rather the strength of government, as a key determinant of the impact of resource rents on political stability. This analysis sheds light on current political transformations and reconfigurations in the resource rich Middle East and North Africa.

We study the association between resource rents and political stability, highlighting the importance of the distribution of political power as a mediating factor. We present a simple theoretical model showing that increased rents are likely to be positively associated with the stability of a powerful incumbent while destabilizing a less powerful incumbent. Our empirical analysis confirms this prediction: Using panel data for more than 120 countries from 1984-2009, our results show that rents can promote political stability, but only when the political power is sufficiently concentrated. Indeed, if the incumbent is sufficiently weak, rents fuel instability. Our main results hold when we control for the effects of income, quality of institutions, time varying common shocks, country fixed effects and various additional covariates.

We study the association between resource rents and political stability, highlighting the importance of the distribution of political power as a mediating factor. We present a simple theoretical model showing that increased rents are likely to be positively associated with the stability of a powerful incumbent while destabilizing a less powerful incumbent. Our empirical analysis confirms this prediction: Using panel data for more than 120 countries from 1984-2009, our results show that rents can promote political stability, but only when the political power is sufficiently concentrated. Indeed, if the incumbent is sufficiently weak, rents fuel instability. Our main results hold when we control for time varying common shocks, country fixed effects and various additional covariates.

A demographic transition resulting from an increase in the size of the young working age population can be a blessing or a curse for economic performance. We focus on the political stability effects of a larger youth population and hypothesize that corruption matters in this nexus. Using panel data covering the period of 2002–2012 for more than 150 countries, we find a negative interaction effect between the relative size of the youth population (17-25 years old) within the total working age population (15-64 years old) and corruption on political stability. This finding is robust, controlling for country and time fixed effects and a set of control variables that may affect stability. The negative interaction term between corruption and the youth population remains robust when we control for the persistency of political stability and the possible endogeneity of the main variables of interest through dynamic panel data estimations. Our findings shed more light on the political turmoil in the Arab world, with the so-called Arab Spring.