Monetary and Fiscal Institutions in Resource-Rich Arab Economies - Economic Research Forum (ERF)

Monetary and Fiscal Institutions in Resource-Rich Arab Economies

October 25,2014
CAIRO, EGYPT

The Arab region is endowed with large natural resource wealth, with resource discoveries taking place since the first half of the twentieth century. The region holds close to half of global oil reserves and a quarter of natural gas reserves. It controls almost a third of oil production and 14 percent of that of natural gas. The hydrocarbon sector dominates most of these economies, accounting on average for 50 percent of GDP and fuel exports represent around three-quarters of merchandise exports. Moreover, these countries derive at least two-thirds of their fiscal revenues from hydrocarbons. Despite this tremendous wealth, resource-rich countries Arab countries have neither achieved economic prosperity nor became developed countries.

In this context, the Economic Research Forum (ERF) has initiated a major research project in 2011 on “understanding and avoiding the oil curse in the Arab world,” which aimed at identifying the root causes of the curse versus the symptoms of oil dependency on macroeconomic mismanagement (including growth, Dutch disease, economic diversification and optimal investment and savings decisions). This research concluded that weak institutions in the Arab World are the root cause of the resource curse, or in other words, while macroeconomic mismanagement and oil abundance are important determinants of performance, these factors are shaped primarily by the prevailing political institutions, which predated resource discovery. Over time, the interaction between these factors became intertwined, preventing these countries from embarking on a sustainable development path.

In this context, this new phase of research focuses on the impact of macroeconomic institutions, both monetary and fiscal, in shaping macroeconomic outcomes. The first research project is on “Institutional Requirements for Optimal Monetary Policy in the Resource-Dependent Arab Economies.” It aims to assess the framework of monetary policy management in resource-dependent economies, including central bank independence and the interactions between monetary and fiscal policies.

The second is on “Fiscal Institutions and Macroeconomic Management in Resource- Rich Arab Economies.” It seeks to examine the impact of budget institutions, rules and procedures on macroeconomic management, stabilization and economic diversification in a sample of resource-endowed Arab countries.

The objective of this workshop is to give the authors of the papers an opportunity to present the first drafts of their research for feedback before the papers are finalized. The workshop follows a meeting for the teams of both projects, which was held in January 2014, to discuss the frameworks, methodologies, data requirements and availability. The next step would be to disseminate the final papers more widely at a later stage.

Speakers, moderators and discussants included Ahmed Galal (Economic Research Forum), Ibrahim Elbadawi (Dubai Economic Council and ERF), Bassem Kamar (University of Monaco), Raimundo Soto (Pontificia Universidad Catolica de Chile), Moez Ben Tahar, Mohamed Goaid, Diaa Noureldin (American University in Cairo and ERF), Damyana Bakardzhieva, Hoda Selim, Russel Krueger, Rania Al-Mashat (Central Bank of Egypt and ERF), Samir Makdisi (American University of Beirut and ERF), Jeff Nugent, Ali Abdel Gadir Ali (ERF), Adeel Malik, Mohamed Bechri (Central Bank of UAE), Hoda El-Enbaby, Dhuha Fadhel, Anders Jensen (London School of Economics), Ahmed Kamaly (AUC), Abbas El-Mejren, Alya Al Foori, Adham Al Said, Hassan Aly (University of Alexandria), Ashraf Eid, Mohamed Benbouziane ,Farah Elias Elhannani, Sherine Al-Shawarby (Cairo University), Alia Al-Mahdi (Cairo University), Kabbashi Suliman, Mahmoud Al-Iriani, Sami Atallah (Lebanese Centre for Policy Studies), Hazem Beblawi (Former Prime Minister of Egypt), Ghazi Joharji (Ministry of Economy and Planning, Saudi Arabia).

Research Fellows

Ahmed Galal

MENA Health Policy Forum


Research Fellows

Ibrahim Elbadawi

Managing Director, Economic Research Forum


Bassem Kamar


Authors

Raimundo Soto

Catholic University, Chile


Research Associates

Moez Ben Tahar

Assistant Professor Faculty of Economics and Management of Sousse, Tunisia


Research Fellows

Mohamed Goaied

Professor of Econometrics, University of Tunisia


Research Associates

Diaa Noureldin

Assistant Professor, Department of Economics, The American University in Cairo


Damyana Bakardzhieva


Research Fellows

Hoda Selim

International Monetary Fund


Russell Krueger


Senior Associates

Samir Makdisi

Professor Emeritus of Economics, American University of Beirut


Senior Associates

Jeffrey Nugent

Professor of Economics, University of Southern California


Senior Associates

Ali Abdel-Gadir Ali

Arab Center for Research and Policy Studies, Qatar


Authors

Adeel Malik

Globe Fellow in the Economies of Muslim Societies at the Oxford Centre for Islamic Studies and a University Research Lecturer in Development Economics at the University of Oxford


Mohamed Bechri


Authors

Hoda El Enbaby

Research Associate at the International Food Policy Research Institute (IFPRI-Egypt)


Dhuha Fadhel


Anders Jensen


Ahmed Kamaly


Abbas Al-Mejren


Alya Al Foori


Adham Al Said


Research Fellows

Hassan Aly

Dean, Business School, Nile University


Ashraf Galal Eid



Farah Elias Elhannani


Sherine El-Shawarby


Policy Affiliates

Alia El Mahdi

Dean, Faculty of Economics and Political Science, Cairo University


Authors

Kabbashi Suliman

University of Khartoum


Research Fellows

Mahmoud Al-Iriani

Economic Advisor, Kuwait Fund for Arab Economic Development (KFAED)


Sami Atallah


Senior Associates

Hazem El-Beblawi

Executive Director, International Monetary Fund


Ghazi Joharji