MacroEconomic IssuesB R

1
Macro-Economic Issues(B) RW Chapters 7-9
Link to Syllabus
Link to Encyclopedia of the Orient
Link to WDI
Link to https//ctools.umich.edu/portal
2
Fiscal Issues, Including Defense
3
MENA Govt Fiscal Balance
Source World Bank (2006) Economic Development
and Prospects Financial Markets in a New Age of
Oil page 112
4
Tax rates
Source Dasgupta et al., Reform and Elusive Grow
th
in the Middle East
5
World Defense Expenditures, 1999
Source US Arms Control and Disarmament Agency,
World Military Expenditures and Arms Transfers
1999-2000
6
Relative size of Military Expenditures
Source Cordesman (2004) Military Balance in the
Middle East
7
Decline of Real Military Expenditures in MENA,
1985-1999
Source Cordesman (2004) Military Balance in the
Middle East
8
Defense Expenditures/GDP, Regions
Source WDI
9
MENA Military Expenditure/GDP,
Source WDI (2006)
10
MENA Military Expenditure/Govt
11
Tariffs and Trade Policy
12
Typical review of Reforms
13
No factories no problems
14
Unweighted Import Tariff Rates-Regions
SAR South Asia, SSA Sub.Sah. Africa, ECA East
Asia
Source World Bank Trade Investment and
Development in MENA Figure 3.1
15
Trade Policy Indicators
Source Dasgupta et al., Reform and Elusive Gro
wth in the Middle
East
16
MENA Tariffs
Column Titles Simple Average, Weighted Aver
age Std. Deviation. ECA4 Central Europ
e Turkey
EAP5 East Asia
Source World Bank Trade, Inv. and Development
17
Long Term Trends in Trade Integration World and
MENA
Source World Bank Trade Investment and
Development in MENA Figure 2.2
18
Intra-Industry Trade Ratio in MENA
Index for all manufactures, in
1988 and 2000. Higher numbers indicate more in
tegrated trade.
Source World Bank Trade Investment
and Development in MENA
Figure 2.7 p. 81
19
Export Diversification of MENA (late 1990s)
The smaller the number, the more diversified
20
Morocco Employment Growth and Manufactured
Exports
Source World Bank Trade Investment and
Development in MENA Figure 1.23
21
Mfg Exports/Total
22
Mfg Exports/Total - MENA
23
Mfg Exports/Total MENA - shorter
24
Inter-regional trade among ESCWA
25
World Market Share of Textiles and Garments
Source World Bank Trade Investment and
Development in MENA Figure 1.7
26
Share of World Exports of Services MENA and
Other Regions
Source World Bank Trade Investment and
Development in MENA Figure 2.10
27
Free Trade Agreements Involving MENA Countries
Most MENA countries are members of the World
Trade Organization Algeria, Iraq, Iran,
Lebanon, Libya, and Yemen are negotiating
accession, and only Syria is not actively seeking
entry. Jordan also has FTA type agreements with S
yria, Kuwait, and Singapore. Israel has FTAs with
Canada, Mexico, and several other countries
Turkey and the EU have an agreement which
involves significant reduction of tariffs
(everything but agriculture), but does not
include Turkeys membership in the EU
EUAA Association Agreement to the European
UnionMediterranean FTA - is a
proto-FTA of the EU with the Mediterranean
countries, also involving foreign aid,
investment regulations, and similar
arrangements. The Greater Arab Free Trade Area (1
997) is a work in progress.
28
Euro-Med Agreements WB
Source WB (2003) Trade and Investment pp. 208
-209
29
Gulf Currency Union
30
(No Transcript)
31
Inflation in GCC
32
Foreign Direct Investment - FDI
33
Link to data on Recent FDI into MENA
Link http//www-personal.umd.umich.edu/mtwomey/ec
onhelp/344files/Table1820International20Finance.
doc
34
Link to FDI Table 17 20th Century FDI in MENA
Link http//www-personal.umd.umich.edu/mtwomey/ec
onhelp/344files/Table17EarlyFI.doc
35
Share of FDI Inflows p. 182
Source World Bank (2004) Unlocking the
Employment Potential in the MENA page 182
36
Quick Review of Theory of Foreign Investment
Distinguish Direct Investment from Portfolio
Investment Direct Investment because of special
advantage of Investor Company
Technology, Trademark/Patent, Operational
practice, Access to credit or external mar
kets, protection of home country
Attraction of country low wages, availability of
resources, tax benefits access to market
Profit rates, wages, import reliance, etc. will
be higher for FDI company Benefits will decline o
ver time (product cycle) FDI will be either mar
ket seeking or resource seeking.
This theory is an alternative to the theory that
FDI seeks to exploit.
37
Turkeys FDI in Egypt
Link to article
38
Turkey Sets Up Its First Industrial Park in Egypt
                
AFP PHOTO/ KHALED DESOUKI
Turkey sets up its first Industrial Park in
EgyptBy Sherine El MadanyFirst
Published January 17, 2008
CAIRO After
signing a free trade agreement in 2005 that was
dubbed a turning point
in relations between two regional powers, it was
only a matter of time before Turkey established
its first private industrial park in Egypt.
Turkish President Abdullah Gul inaugurated
Wednesday The Polaris industrial park, the
first of its kind in Egypt, with investments
totaling 1.5 billion. The private industrial pa
rk is a joint venture between the two countries
that is estimated to attract 4 billion of
investments in the next four years.
Trade ties between the two countries have
already been on the rise since ratification of
the FTA, said Minister of Trade and Industry
Rachid Mohamed Rachid in a press statement.
The majority of Turkish investments in Egypt
seek to export to foreign markets, especially in
Europe, the Middle East and Africa, as well as
benefit from partnership agreements between Egypt
and Europe, allowing preferential advantage of
products manufactured in Egypt to enter these
markets without customs, he added.
Sprawling two million square meters in the Sixth
of October City an area fit to host some 300
companies and factories the cluster will
include Turkish manufacturing operations from a
number of sectors including textile and
ready-made garments, furniture, automotive,
glass, and food processing. The ministry expects
total production capacity to reach 3.54
billion per year. Gul, who started an official vi
sit to Egypt on Tuesday, told Reuters that recent
economic reforms in the Arab country spurred
interest from Turkish investors.
39
FDI Potential
Source World Bank Trade Investment
and Development in MENA Figure 1.18
40
Jordan Times on Vietnamese Womens Strike in
Jordan March 2008
Link to article
Link to site on QIZs http//www.jordanecb.org/i
nvestment_qiz.shtm
41
QIZ Vietnamese workers refuse to end strike
Jordan Times March 5, 3008

By Hani Hazaimeh
SAHAB - A total of
176 Vietnamese women at a Taiwanese-owned

apparel
manufacturing company in Al Tajamouat Industrial
Estate are still on
strike demanding a pay increase.
Upon the work stoppage on February 10, the
workers linked their return to a WD Apparel
Corporations consent to increase their monthly
salary from 175 to 265 per month and a basic
eight-hour workday. The factory owner said the
demand contradicts employment contracts they had
signed. He accused some strikers of exercising v
iolence and sabotage. When the company refused t
o meet their conditions, they started rioting and
sabotaged some of the companys properties. The
management had no choice but to call police to
restore order, James Shen, WD general manager,
told The Jordan Times yesterday.
Some of the strikers stole mechanical parts from
sewing machines to prevent the company from
hiring other workers to replace them, he
charged. He added that the management has met wit
h 10 representatives of the strikers, but the two
sides reached no agreement although the managers
offered some compensation. He explained that
the financial compensation was paid for those who
had worked overtime hours and were the most
productive. Those were satisfied with the compe
nsation and wanted to go back to work. But those
who did not get compensation threatened them,
Shen claimed. Thirty-year-old Di Thi Wei, one of
the workers, upheld his claim.
She told The Jordan Times that she accepted the
compensation and decided to go back to work
despite the strike leaders threats. The company
moved us to a different place to protect us from
being assaulted by the strike leaders, she
added. Di Thi was one of the 85 women who resumed
work, said the general manager, noting that the
company had to rent new dormitories to ensure
their safety. Echoing her colleagues words, Nguy
en Thi Tuoi, 26, said she was beaten badly by the
strike leaders for going back to work before she
moved to the new dorms. They even poured cold wa
ter on me while I was sleeping in bed in the
middle of a cold night, she told The Jordan
Times. They tore my clothes and my shoes and I
had to borrow clothes from another worker.
42
Excerpt from US Embassy Site on Jordan FTA
http//usembassy-amman.org.jo/QIIZ.htm
QUALIFYING A PRODUCT Q  How does the FTA affect
the Qualified Industrial Zone (QIZ) initiative?
A  The FTA does not supersede or eliminate the
QIZ initiative.  The QIZ initiative currently
grants immediate tariff and quota-free access to
the U.S. market to goods that are produced in the
QIZs and meet specific rules of origin
requirements.  Under the FTA, tariffs and quotas
for many goods are phased out over time, and
rules of origin require 35 Jordanian content. 
Thus for some high-tariff goods, producing in
QIZs will retain an advantage.
 For instance, many apparel goods face U.S.
tariffs of up to 30.  Under the FTA, tariffs on
these goods would be reduced over ten years, and
Jordanian exports would have to meet the 35
Jordanian content level.  Under the QIZ
initiative, those same goods would enjoy
immediate elimination of tariffs and quotas, and
would require a lower level of Jordanian inputs. 
Thus in this case, QIZ-produced products would
enjoy a comparative advantage. Q Who qualifies
products for duty free entry in the United
States?  What information is required?
A A committee consisting of Jordanian and
Israeli government officials determines whether
products are eligible for duty-free treatment. 
The manufacturer must provide detailed
information about the costs of materials and
labor to prove that the product fulfills QIZ
production requirements.
43
US-Jordan FTA WB
Source WB (2003) Trade and Investment p. 208
44
Privatization
45
Privatization Proceeds
Source Dasgupta et al., Reform and Elusive
Growth in the Middle East
46
Cumulative Privatization Proceeds/GDP (),
1988-2003
Source Privatization proceeds from WB
Privatization database http//rru.worldbank.org/Pr
ivatization/
GDP from WDI
47
Stock Market data
Source Neaime (2006) Thunderbird Review
48
Market Capitalization/GDP
US
Jordan
Lebanon
Iran
Source WDI. Missing are Algeria, Iraq, Syria,
Yemen
49
Debt Data
50
Table 8.2 p. 214. External Debt, 1994 and 2004
51
Debt/GDP
52
Foreign Assets/GDP Oil Exporters (Data in
billion US)
Sources Estimates on overseas assets referring
to 2007-, from Setser and Ziemba, Understanding
the New Financial Superpower- The Management of
GCC Official Foreign Assets, RGE Monitor Dec.
2007. GDP estimates (for 2007) from EIU Monthly
Reports.
53
(No Transcript)
54
Tech. Composition of exports of Lebanon and other
MENA
55
Trade to GDP Ratios in MENA
Source World Bank Trade Investment and
Development in MENA Figure 2.3
56
Hirschman Export Concentration Index
LAC-Latin America, EAP5 East Asia, ECA3 Europe.
Source World Bank, Trade Investment and
Development
57
Tourism/GDP MENA and Other Regions
Source World Bank Trade Investment and
Development in MENA Figure 2.8
58
Bush kicks off new round of free-trade talks in
the Middle East
U.S. president seeks to create FTAs with every
nation in the region by 2013By Agence France
Presse (AFP) Compiled by Daily Star staff
Friday, March 11, 2005 The Bush administration,
seeking to provide economic support for its
efforts to spread democracy in the Middle East,
launched a new round of free-trade talks in the
region this week while an Egyptian official said
Wednesday he believed his country's own
negotiations with the United States would start
soon. Egyptian Trade Minister Rashid Mohammed
Rashid described his meeting in Washington with
Acting U.S. Trade Representative Peter Allgeier
in optimistic terms, saying he was hopeful that
free-trade talks with the United States would
begin "in the near future." "We do not have a
specific date for when we can start negotiation
of an FTA (Free Trade Agreement). But we are both
moving on the right track," Rashid said in
describing his talks with Allgeier.
The Bush administration is pushing to strike
free-trade deals with a number of countries in
the Middle East as a prelude to Bush's ultimate
goal of creating a free-trade area throughout the
region by 2013. The hope is that greater trade
with the United States will bolster economic
growth in the region and help support Bush's
goals of fighting terrorism and spreading
democracy in that part of the world.
The administration currently has free-trade
agreements in that area of the world with Israel,
Jordan and Morocco. A free-trade deal negotiated
last year with Bahrain is pending congressional
approval. The administration has delayed starting
talks with Egypt until the country makes further
economic reforms. Rashid argued that the country
is moving quickly to implement a wide range of
economic reforms and a free-trade agreement with
the United States would help promote even greater
reforms.