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Working Paper

MENA Export Performance and Specialization : The Role of Financial Sector Development and Governance

LIVING STANDARDS LINE OF CREDIT CAPITAL MARKETS BORROWER LINES OF CREDIT ECONOMIC GROWTH INTANGIBLE ASSETS FINANCIAL SECTORS EXPORT SECTORS INCOME INTEREST SAVINGS ACCOUNTS PROPERTY RIGHTS EXCHANGE ECONOMIC DEVELOPMENTS INCOME GROUP GDP PER CAPITA GOOD GOVERNANCE LIQUIDITY EXPORTS DEVELOPING COUNTRIES POLITICAL ECONOMY WORLD DEVELOPMENT INDICATORS INCENTIVES VARIABLES BORROWERS CAPITAL STOCK PRICE BENCHMARKS SECURE PROPERTY RIGHTS EXTERNAL FINANCE DEVELOPMENT LEGAL FRAMEWORKS MACROECONOMIC STABILITY INFLUENCE SAVINGS DEVELOPMENT ECONOMICS EXPORT GROWTH CONTRACT ENFORCEMENT RISK DIVERSIFICATION LOW-INCOME COUNTRIES DEMOCRACY CORPORATE FINANCE INTEREST RATES MIDDLE-INCOME ECONOMIES FINANCIAL INSTITUTIONS MARKETS CAPITAL MARKET PRIVATE INVESTMENT AGENCY PROBLEMS FINANCIAL PRODUCTS GOVERNANCE INDICATORS INCOME LEVELS MIDDLE-INCOME COUNTRIES GLOBAL EXPORTS TRADITIONAL BANKING COUNTRY-LEVEL INDICATORS AGENCY COSTS INVENTORY FINANCIAL SYSTEM REAL ESTATE LEGAL FRAMEWORK SAVINGS ACCOUNT EQUITY HUMAN CAPITAL VALUE ADDED WAGES GLOBAL MARKET OWNERSHIP STRUCTURE ECONOMIC OUTCOMES DOMESTIC MARKETS INTERNATIONAL TRADE BARRIERS VALUE COMPETITIVENESS FOREIGN DIRECT INVESTMENT CREDIT COMPARATIVE ADVANTAGES FOREIGN INVESTMENT WORKING CAPITAL AGRICULTURE JOB CREATION SHARES ASSETS BENCHMARK SECURITIES GOVERNANCE INDICATOR GOVERNANCE ENFORCEMENT INSURANCE ECONOMIC DEVELOPMENT TRADE ECONOMIC INTEGRATION BANK LOAN GDP GOODS INVESTOR THEORY FINANCIAL DEVELOPMENT INTANGIBLE LEGAL SYSTEM FINANCIAL MARKET BUSINESS CLIMATE INVESTMENT SHARE COMPARATIVE ADVANTAGE INVESTMENT CLIMATE COLLATERAL FINANCIAL MARKETS BUSINESS ENVIRONMENT BANKING POLITICAL STABILITY FINANCIAL INTERMEDIARY INVESTMENTS LENDING WORLD TRADE EXTERNAL FINANCING RISK OF EXPROPRIATION FINANCIAL SYSTEMS LABOR MARKETS OUTCOMES FINANCIAL SECTOR ORGANIZATIONAL CAPITAL CASH FLOW FINANCIAL SECTOR DEVELOPMENT DEVELOPMENT POLICY CORPORATE GOVERNANCE
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World Bank, Washington, DC
Middle East and North Africa
2016-04-26T17:05:28Z | 2016-04-26T17:05:28Z | 2016-03

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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