Between Stabilization and Allocation in the MENA Region: Are Competition Laws Helping? - Economic Research Forum (ERF)

Between Stabilization and Allocation in the MENA Region: Are Competition Laws Helping?

Jala Youssef and Chahir Zaki


Date:
July, 2019

NO.
1319

Publisher:
Economic Research Forum

Topic:
L4. Antitrust Issues and Policies
K2. Regulation and Business Law
L1. Market Structure, Firm Strategy, and Market Performance
O1. Economic Development

In the 1990s, many MENA countries relied on adjustment and stabilization programs offered by international organizations. Surprisingly, these programs implicitly implied an orientation towards a market economy structure without an explicit adoption of competition laws. This in turn raises questions on the extent to which these programs help adjusting structural and allocation issues in the beneficiaries’ economies or rather only focuses on adjusting macroeconomic imbalances. To our knowledge, there is no study assessing the macroeconomic outcomes of competition laws in the latter. Against this backdrop, our main objective is to empirically assess the impact of competition laws in the MENA region on economic growth. Our contribution is threefold: first, we create indices to assess the effectiveness of MENA countries competition laws using Youssef and Zaki (2019) methodology. Second, we disentangle the effect of competition laws on growth by distinguishing between the structural and the cyclical components of GDP growth. Third, we control for the endogeneity of the competition law adoption. Our main findings show that in general, the overall assessment of MENA countries competition legislations seems to be broadly average with the Maltese and the Algerian legislations the best performers among the group while the Iraqi and the Yemeni legislations are the weakest. Advocacy seems to be an area of weakness. As per the effect of competition policy rules on economic growth in MENA countries, competition measures exert a positive and statistically significant effect on the growth of the trend component of GDP, while its effects on the cyclical component is rather insignificant.

Authors

Jala Youssef

World Bank


Research Fellows

Chahir Zaki

Associate Professor of Economics and Director of the French section, Cairo University


Project

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