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Good governance a stimulus for trade in Middle East




The governance in Middle-Eastern and North African countries is a major factor in their businesses' ability to trade and participate in the global economy. The quality of institutions correlates with the export performance of companies, as a FEMISE report (FEM41-08) shows.



The governance in Middle-Eastern and North African countries is a major factor in their businesses' ability to trade and participate in the global economy. ©DR
The governance in Middle-Eastern and North African countries is a major factor in their businesses' ability to trade and participate in the global economy. ©DR
The latest FEMISE publication, "Corporate Performance in Transition: The Role of Business Constraints and Institutions in the South Mediterranean Region", is structured in three parts.
After having analysed the knowhow and constraints of companies located in the Middle East and North Africa, the report goes on to examine the case of Egyptian companies, looking at the obstacles impeding their performance.
The third part of the report, coordinated by economics professor Inmaculada Martínez-Zarzoso, underlines the importance of governance in companies' ability to export or import.
 
As part of the study, the FEMISE economists looked at bilateral exports between 189 trading partners and 19 exporting countries between 1996 and 2013. It transpires that, while democracy and well-functioning institutions are a prerequisite, the business environment not only has an influence on productivity, but also has an effect on the performance of the economy as a whole. Trading environment and institutional framework impact both corporate performance and the country's economic vitality.

The importance of consistent governance in facilitating trade

The study shows that, in the wake of the Arab Spring, new criteria came to the fore. Thus, invoicing and accounting are seen as determining factors in boosting exports.
 
The business world needs a stable environment, especially where property rights are concerned. Respect for the rule of law, fighting against corruption and an efficient administration boost business relations. Furthermore, two countries with similar governance will see a positive effect on their export levels. 
 
"Similar regulations and the rule of law boost exports in the Middle East. Policies aimed at freeing up trade could therefore be targeted at trading partners with similar norms of governance," the document states, adding that each of the six governance indicators has a positive impact on bilateral trade. 

For more on this timely subject, please download the report available here.

In partnership with Femise

Version française


 

Nathalie Bureau du Colombier, MARSEILLE


Thursday, January 5th 2017



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