MENA Export Performance and Specialization : The Role of Financial Sector Development and Governance
Industry and financial profiles of MENA firms may underpin the observation that MENA country exports are below potential and skewed toward low value-added goods that are unable to spur rapid job creation and inclusive growth. To assess this link, t...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/03/26138023/mena-export-performance-specialization-role-financial-sector-development-governance http://hdl.handle.net/10986/24157 |
| Summary: | Industry and financial profiles of MENA
firms may underpin the observation that MENA country exports
are below potential and skewed toward low value-added goods
that are unable to spur rapid job creation and inclusive
growth. To assess this link, the paper combines analysis
highlighting external financing as a determinant of export
performance, and analysis highlighting sector asset
tangibility and governance. Why? Because high value-added
sectors tend to have higher shares of intangible assets and
to create innovative products requiring substantial research
and development or investments, thereby making these sectors
more dependent on external financing. Using sector- and
firm-level export data with country-level indicators, the
results indicate that countries with more developed
financial sectors and stronger governance tend to have
higher exports from sectors that are more reliant on finance
external to the firm, and lower exports from sectors with
higher shares of tangible assets. Interestingly, financial
sector development boosts exports less in MENA than in
non-MENA countries. To foster expansion of higher value
exports, the results suggest a critical need for: (i) deeper
financial sector development that strengthens market-based
systems, such as asset registries and credit reporting
agencies, and (ii) strengthening of legal and governance frameworks. |
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