Conference Paper
Which Policies Induce Structural Change inMENA Countries? Evidence from Macro and Micro Data
No.
ERF29AC_43
Publisher
ERF
Date
May, 2023
This paper aims at studying the policies that can leverage the structural change process at the sectoral level in developing countries while giving a particular emphasis on the Middle East and North Africa countries. The paper relies on the World Bank Enterprise Surveys firm-level data to compute structural change on the sectoral level in a large group of developing countries. Afterwards, it investigates the role of both structural and macroeconomic stabilization policies in driving structural change while proposing novel measurements to capture these policies. The empirical work relies on the multilevel model to merge sector-level data with macro data. The main findings of the productivity decomposition show that structural change patterns are very heterogeneous among the different sectors. Furthermore, structural change contribution to productivity is modest relative to the within contribution among both manufacturing and services sectors. As per the econometric findings, they show that competition, trade, financial policies and macroeconomic institutions along with business cycle downturns improve structural change. In contrast, policy rate and cyclical REER appreciation reduce it. The paper’s findings also highlight the importance of countercyclical fiscal and monetary policies in driving structural change. Finally, competition and trade de facto structural policies measures enhance structural change.
Authors
Jala Youssef
PhD Candidate in Economics and a Teaching...