I. Background toresearch task : Introduction: A growing number of publications and literaturehas examined the link between institutions and Economic Growth.This research aims to investigate if there is relation betweeninstitutional quality and economic growth in four North African countries: Morocco, Algeria, Tunisiaand Egypt. It is worth to mention that the first three countrieshave a lot in common:· An identical colonial heritage ( French occupation ) , · similar racial composition ( Arabs and Amazighs ) , · Language (Arabic and Amazigh).· French Language is still predominant in Business.
Nevertheless, the useof English has been growing steadily in recent years.Egypt shares the Arabicculture and Language, but differs in terms of its trade partners and thegeopolitical position.Morocco, Tunisia andEgypt have been following important economic reforms, including trade policyreforms, since the second half of the 1980s. Thus, the divergence with theexperience of Algeria should provide some interesting ideas. In addition to that, the type of institutionsthat was built and left uponindependence in the 1950s by the Frenchcolonial administration in Morocco and Tunisia confirm the theory by Acemoglu etal. (2003) in the sense that colonial powers (Europeans) ‘were more likelyto introduce extractive institutions in regions where they did not plan tosettle’. Nevertheless, theFrench colonial power planned to settle in Algeria and, annexed the country tothe Territoire français . Accordingto the idea proposed in Acemoglu et al.
,Algeria should have emerged with better institutions. The historical factssince independence in the early 1960sindicate that this was not the case. The civil war in 1990s affected theeconomy negatively and contributed to the situation today.In fact, Algeria isinferior to Morocco or Tunisia in terms of institutional quality.These countries have been adopting a rangeof policy reforms for several decades. The most obvious are reforms related totrade. Financial reforms gained a great deal of popularity back in the 1980s.
The Arab Spring of 2011brought much political instability to Both Egypt and Tunisia and was causedmostly by unemployment, corruption and aging dictatorship. Morocco and Algeria were relatively unaffectedby the unrest despite having similar problems. The fact that somepolicies will not produce the anticipated results is not unforeseen if we tookinto consideration other factors such as Institutional quality and GoodGovernance. Governance andInstitutions Literature: On the topic of the evolution of institutionsin a society, North (1991: 97) states that:”They evolve incrementally, connecting the past to thepresent, and the future; history in consequence is largely a story ofinstitutional evolution in which the historical performance of economies canonly be understood as a part of a sequential story. Institutions provide theincentive structure of an economy; as that structure evolves, it shapes thedirection of economic change towards growth, stagnation, or decline.
“Economic institutions can be defined as ‘norms ofeconomic behavior’ (see for example Matthews 1986, and Nee and Ingram 1998).Hall and Jones (1999) declare that the differencebetween economic developments and productivity in different countries could be understoodessentially by the difference in social structure. ‘The centralhypothesis … is that the primary, fundamental determinant of a country’slong-run economic performance is its social infrastructure. By socialinfrastructure, we mean the institutions and government policies that providethe incentives for individuals and firms in an economy’. In this regardKaufmann (2003) emphasis that economic development is not only related to themacroeconomic situation but to otherfactors such as re quality of the institutional structure, independence of thejudiciary, level of corruption and the ease of doing business. Similar resultsare also drawn by Roll and Talbott (2003), who conclude that about 80 percentof differences in GNI per capita between different countries are explained by such factors as property rights, politicalrights, governance expenses, freedom of speech, etc., while negative effectscome from excessive administrative regulation, informal economy, tradebarriers, etc.According to Khan (2007), developing countries inherita limited market infrastructure which demands reforming governance initiativesto boost free market initiatives and raise production .
Based on empiricalanalysis, Khan (2007) argues for a substantial correlation between goodgovernance and an increase of income per capita, seeing good governance as animportant factor in economic growth. Others were suspicious of this approach, stating thatthis supposed correlation can be only theoretical and there is not enoughevidence to support it (Kurtz and Shrank, 2007). According to them, therelation between economic growth and good governance can be obvious only indeveloped countries or in a very long period of time. Governance Indicators: In order to effectively measure the quality of these institutions, testthe claims that emphasis the importance of this factor in Economic growth and development,we need measurements. The World Bank researches developed aggregate Governance Indicators fromavailable sources.
The 1999 papers “Aggregating Governance” and “GovernanceMatters” presented the Worldwide Governance Indicators. (Kaufmann et al.,1999a; Kaufmann et al., 1999b).The indicators were defined as the following: 1.
Voice and Accountability (VA), the extent towhich a country’s citizens are able toparticipate in selecting their government, as well as freedom of expression,freedom of association, and free media. 2. Political stability and absence of violence / terrorism (PV), perceptions ofthe likelihood that the governmentwill be destabilized or overthrown by unconstitutional or violent means,including political violence or terrorism. It is also the capacity of thegovernment to formulate and implement policies.
3. Government effectiveness (GE), the quality ofpublic services, the quality of the civilservice and the degree of its independence from political pressures, thequality of policy formulation and implementation, and the credibility of thegovernment’s commitment to such policies. 4.
Regulatory quality (RQ), the ability ofthe government to formulate and implementsound policies and regulations that permit and promote private sectordevelopment. 5. Rule of law (RL), the extent towhich agents have confidence in and abide by the rules of society, and in particular the quality of contractenforcement, the police, and the courts, as well as the likelihood of crime andviolence. 6. Control of corruption (CC), the extent towhich public power is exercised for privategain, including both petty and grand forms of corruption, as well as “capture”of the state by elites and private interests.
The indicatorsare not meant to be considered as absolute measures of governance, but aremeasures of a specific country’s relative rank with respect to that indicator. Most arepublished as World Bank Working Papers, but one has been published in apeer-reviewed journal. (Kaufmann et al. 2004, 2005, 2006a; Kaufmann etal. 1999a, 2002; Kaufmann et al.
, 1999b). II. research Question : The Objective of this research is to investigate whether there is arelationship between Good Governance and Economic Growth in these fourth NorthAfrican countries (Algeria, Egypt, Morocco and Tunisia).
To achieve that , the following issues below should be addressed . 1. What are the reasons behind the disappointing economic performance ofNorth African countries despite many recent reforms? 2.
What are the indicators of Governance?3. Is there a correlation between Good Governance and Economic Growth in theNorth African region? III. Methodology : (2 – 3pages ) This research paper seeksto identify the correlation between good governance and economic growth in the 4selected North African countries.The methodological approach of this article is straight forward and asfollows:· after revising the literature,the research focuses through descriptive interpretation the data on economicgrowth in the 4 North African countries ( Algeria , Morocco, Tunisia and Egypt ) and forthe same period 1996-2016 .
· The paper presents an econometricmodel, which measures the supposed relation between good governance andeconomic growth for different countries in the Western Balkans. · From the statistical point of view, the article uses the databases from: ü World Bank (World Governance Indicators – WGI),ü World Development indicators WDI.ü International Monetary fund. · The research prepared work does not intend to drawgeneral conclusions about the relationship between Economic Growth andGovernance Quality , but only toillustrate the above correlation in the North African region . The following econometric model is used: Grgdp1 / cap = a + log GDP96 +?Acc1 + ?Stb1 + ?Eff1 + ?Rre1 + ?Law1 + ?Crr1 In this model the indicators of goodgovernance are those set by the World Bank· Grgdp1/cap represents economic growth (growth of GDP percapita). · logGDP96 is the logarithm of the GDP per capita forthe base year of the study (1996) · Acc1 represents the governance indicator thatreflects the ‘governance accountability’ (Voice and Accountability); · Stb1 is an indicator representing ‘politicalstability and lack of violence’ (Political Stability and no Violence); · Eff 1 is the indicator of ‘governanceefficiency’ (Governance Effectiveness);· Rre1 is the indicator which expresses the ‘administrativeand regulatory framework’ (Regulatory Quality);· Law1 is the index that characterizes thelevel of ‘law enforcement’ (Rule of Law); · Crr 1 represents index of corruption’s level'(Control of Corruption). · In this model three other variables areincluded, which are considered to affect in a considerable way economic growth,although not directly related to governance): The data will be preceded though various statisticaltests on STATA or SPSS, and results will be interpreted accordingly. I.
Time Scale : II. Deadline Activity Remarks February 28th , 2018 Master thesis registration. Complete literature searches Look for adequate database Some docs are already at hand.
By 30 of March 2018 Complete literature categorizing and start writing your thesis draft. Database approved or rejected by supervisor By 30th of April 2018 Continue writing the thesis. Conduct statistical tests If database is not approved by the supervisor, start working on a qualitative research. April – August 2018 Writing Along full-time work. August 31th , 2018 Last deadline 2 paper-copies III. Resources Needed : · The databasesneeded are available on World Bank Database (WB) and International Monetaryfund database (IMF).
In form of Excel sheet, CSV, Tabbed TXT. · Academic Publicationsand books are available online. · Feedbacksfrom the supervisor which are extremely crucial. · STATA orSPSS will be used to conduct statistical tests. IV.
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