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Industrial Policy in the Middle East and North Africa

Industrial Policy in the Middle East and North Africa: Rethinking the Role of the State

Edited by Ahmed Galal
Copyright Date: 2008
Pages: 160
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  • Book Info
    Industrial Policy in the Middle East and North Africa
    Book Description:

    Most governments in the Middle East and North Africa (MENA) region use trade policy to protect certain industries, provide tax incentives to promote a particular type of investment, and make subsidized credit available to firms of a certain size. Such government intervention, known as industrial policy, is the topic of this book. The aim is to assess whether state intervention leads to net benefits to society, why policymakers intervene, and how to bring about a healthier balance between states and markets. Answers to these questions are given in six chapters based on research papers that were presented at a conference held in Cairo in November 2005, and include case studies on Egypt, Morocco, Turkey, and Jordan. Contributors: Hasan Ersel, Ahmed Galal, Najib Harabi, Nihal El Megharbel, Mustapha Nabli, and Marcus Noland. An Egyptian Center for Economic Studies / World Bank Publication

    eISBN: 978-1-61797-524-0
    Subjects: Business, Economics, Sociology

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-viii)
  4. Contributors
    (pp. ix-xii)
  5. CHAPTER 1 Comparative Assessment of Industrial Policy in Selected MENA Countries: An Overview
    (pp. 1-10)
    Ahmed Galal

    No debate in the development literature has persisted as long and with such intensity as that related to government intervention in economic activity. In the last half century alone, views and actual policies have changed considerably. In the 1950s and 1960s, it was believed that markets failed widely and government intervention was necessary to speed up the process of economic transformation and the rate of economic growth. Most developing countries, including those in the Middle East and North Africa, adopted import substitution strategies in conjunction with high levels of protection, central planning, public ownership, and nonuniform policies across sectors and...

  6. CHAPTER 2 Do Governments Pick Winners or Losers? An Assessment of Industrial Policy in Egypt
    (pp. 11-34)
    Ahmed Galal and Nihal El-Megharbel

    As in other developing countries, selective government intervention in Egyptian economic activities dates back to World War II. At that time, a shortage of products in the global markets and the drive for rapid diversification and industrialization led Egypt to erect high trade barriers to protect domestic industries and provide support to large national projects. This trend peaked in the late fifties and early sixties when the government nationalized most industries, adopted differentiated and high levels of protection, provided subsidies, and controlled prices of inputs and outputs as well as interest and exchange rates. For almost a decade and a...

  7. CHAPTER 3 Incentives or Compensation? Government Support for Private Investments in Turkey
    (pp. 35-50)
    Hasan Ersel and Alpay Filiztekin

    The history of government support to private investment in Turkey is not a new phenomenon. In fact, legislation concerning such government interventions can be traced back to the Ottoman era, when in 1913 the Provisory Law on Supporting Industry was enacted. The weakness of the private sector, coupled with the 1929 world crisis, led Turkey to adopt the etatist strategy, that is, government-led industrialization, in the 1930s. Although this strategy lost its initial momentum and consistency, particularly during the 1950s, it remained in effect until 1960.

    The adoption of the idea of development planning in the early 1960s systematized economic...

  8. CHAPTER 4 An Empirical Analysis of Industrial Policy in Morocco
    (pp. 51-80)
    Najib Harabi

    Until recently, two extreme views often seem to have dominated the discussions of the role of the government in economic development. The first view has been that effective government is not only necessary due to market failure but possibly even sufficient to achieve economic development. At least implicit in this view is the argument that if a particular political regime could not be counted on to perform completely and honestly in this process, either the regime would be forced to do so as a result of building political pressures or else it would lose power, through elections if available or...

  9. CHAPTER 5 The East Asian Industrial Policy Experience: Implications for the Middle East
    (pp. 81-108)
    Marcus Noland and Howard Pack

    In the policy realm, the orthodox terms of engagement with the global economy have been enshrined in the Washington Consensus of secure property rights, fiscal discipline, sectorally neutral tax and expenditure policies, financial liberalization, unified and competitive exchange rates, openness to foreign trade and investment, privatization, and deregulation. However, disappointing results in the Middle East and other regions, and the Asian financial crisis of the late 1990s, have contributed to a crisis of faith in Washington and elsewhere.

    One response has been to augment this package with so-called ‘second generation’ reforms such as strengthening prudential supervision of financial markets, decreasing...

  10. CHAPTER 6 The Political Economy of Industrial Policy in the Middle East and North Africa
    (pp. 109-136)
    Mustapha K. Nabli, Jennifer Keller, Claudia Nassif and Carlos Silva-Jáuregui

    The mainstream view on industrial policy has shifted back and forth over the past half century, as explained in previous chapters. The most recent thinking is not in favor of as much active industrial policy as a few decades ago. The story in the MENA region is different. Throughout the 1980s and 1990s, MENA countries maintained strong roles for the government and policies of significant government intervention in production and economic planning. During the same period, countries in Latin America, Europe, and Central Asia, which had broadly similar initial conditions, undertook sweeping reforms of their economic structures and refocused their...

  11. Index
    (pp. 137-147)