Political Stability, Firm Characteristics and Performance: Evidence From 6,083 Private Firms in the Middle East - Economic Research Forum (ERF)

Political Stability, Firm Characteristics and Performance: Evidence From 6,083 Private Firms in the Middle East

Amr Hosny

September, 2017


24 pages

L2. Firm Objectives, Organization, and Behavior

Using firm-level data from an EBRD/EIB/WB joint survey covering more than 6,000 private firms in 8 countries in the Middle East and North Africa, this paper (i) examines the relationship between firm characteristics and their perception of the effect of political instability on their operations, and (ii) tests whether political instability has had a negative effect on firm performance. Using ordered and binary probit/logit models, we find that (i) export-oriented and larger-sized firms are less likely to report political instability as a sever obstacle to their operations. Using OLS and an endogenous treatment linear regression models, we find that the perception of political instability is negatively associated with firm performance, and after correcting for endogeneity it can even have a negative causal effect on firms’ sales and employment growth, all else held constant. Results are largely robust to different specifications and econometric methods.


باستخدام بيانات على مستوى الشركات من مسح مشترك بين البنك الأوروبي للإنشاء والتعمير / البنك الأوروبي للاستثمار والبنك الدولي يغطي أكثر من 6000 شركة خاصة في 8 بلدان في الشرق الأوسط وشمال أفريقيا، تبحث هذه الورقة (1) العلاقة بين خصائص الشركات وتصورها لتأثير السياسة وعدم استقرار عملياتهم، و (2) اختبار ما إذا كان عدم الاستقرار السياسي قد أثر سلبا على الأداء الثابت. وباستخدام نماذج بروبيت / لوجيت المطلوبة والثنائية، نجد أن (1) الشركات الموجهة نحو التصدير والأكبر حجما هي أقل عرضة للإبلاغ عن عدم الاستقرار السياسي كعائق رئيسي أمام عملياتها. وباستخدام نموذج الانحدار الخطي للعلاج الداخلي، نجد أن تصور عدم الاستقرار السياسي مرتبط سلبا بالأداء الثابت، وبعد التصحيح من أجل التجانس يمكن أن يكون له تأثير سببي سلبي على مبيعات الشركات ونمو العمالة. النتائج مطابقة إلى حد كبير للمواصفات المختلفة وأساليب الاقتصاد القياسي

Research Associates

Amr Hosny

Economist Program, International Monetary Fund (IMF)



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