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ThePastandtheFutureTradePatternsoftheMENARegion:ThePursuitofGrowth

PınarTat,AbdullahAltunandHalitYanıkkaya

WorkingPaperNo.1650

August2023

THEPASTANDTHEFUTURETRADEPATTERNS

OFTHEMENAREGION:THEPURSUITOFGROWTH

PınarTat,AbdullahAltun1,HalitYanıkkaya2

WorkingPaperNo.1650

August2023

ThethirdauthoracknowledgessupportfromtheTurkishAcademyofSciences.

ThispaperwasoriginallypresentedduringtheERF29thAnnualConferenceon“TheFutureofMENADevelopmentPath:RisksandOpportunitiesinanEmergingWorldOrder”,May4-6,2023.

Sendcorrespondenceto:

PınarTat

GebzeTechnicalUniversity

pinartat@.tr

1DepartmentofEconomics,GebzeTechnicalUniversity,Turkey

(aaltun@.tr)

.

2DepartmentofEconomics,GebzeTechnicalUniversity,Turkey

(halityanikkaya@.tr)

.

Firstpublishedin2023by

TheEconomicResearchForum(ERF)

21Al-SadAl-AalyStreet

Dokki,Giza

Egypt

.eg

Copyright©TheEconomicResearchForum,2023

Allrightsreserved.Nopartofthispublicationmaybereproducedinanyformorbyany

electronicormechanicalmeans,includinginformationstorageandretrievalsystems,withoutpermissioninwritingfromthepublisher.

Thefindings,interpretationsandconclusionsexpressedinthispublicationareentirelythoseoftheauthor(s)andshouldnotbeattributedtotheEconomicResearchForum,membersofits

BoardofTrustees,oritsdonors.

1

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Abstract

ThisstudyinvestigatesthepasttradepatternsoftheMENAregionandanalyzesthesectoralgrowthimpactsofthem.Weemployasampleoftwoagriculture,onemining,tenmanufacturing,andtwelveservicesectorsof19MENAcountriesand186tradingpartnersfrom1990to2015.OurgraphicalillustrationindicatesthatwhilethesharesoftheEU(themajortradingpartnerwithasharehigherthan30%)andotherdevelopedcountriesinalltypesoftradedecrease,theshareoftheotherdevelopingcountriesinallkindsoftradeandtheshareofChinainintermediatetradeincrease.Ourgrowthresultssuggestthatwhileexpandingforwardglobalvaluechainparticipationwithallgroupsorcountriespromotesthemanufacturingsector,expandingforwardglobalvaluechainparticipationwithChinaandotherdevelopingcountriesenhancestheservicesector.AllindustriesgainfromanincreaseinthebackwardglobalvaluechainparticipationwiththeEUandtheUS.OurfindingsalsoproposeastrongheterogeneitywithintheMENAregionintermsoftypesoftradeflowsandtradepartners.Giventheseresults,wearguethatglobalvaluechainparticipationoftheMENAregionpromotesthegrowthofallsectorsdependingonthetypesofflowsandtradingpartners.TheseresultsrevealtheimportanceofsystematicanddynamictradepoliciestoeffectivelyintegratetheMENAregionintobothregionalandglobalvaluechainsandtoreapthebenefitsofthem.

Keywords:Tradepatterns,Sectoralgrowth,MENAregion

JELClassifications:F10,F43,D57.

ﻣﻠﺨﺺ

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2

1.Introduction

Increasinglychangingtradestructureshavecontinuedtoshapethedevelopmentpathsofcountries.ThefutureoftheMiddleEastandNorthAfrican(MENA)regionalsohighlydependsonthecurrenttrendininternationaltrade.AccordingtothelatestWorldBank(WB)statistics,theshareofexportsoftheMENAcountriesintheirgrossdomesticproduct(GDP)is36%andtheshareofimportsinGDPis35%in2020.Giventhesehighsharesandthegeographicalpositionoftheregion,thetradestructureoftheMENAregiondeservesspecialattention.

Overthepastthreedecades,liberalizationeffortshaveincreasedwithdecreasingtransportationcostsandenhancementininformationandtelecommunicationtechnologies.TheMENAregionhasalsoparticipatedintheseactionsthroughdifferentbilateralandregionaltradeagreementswiththecountrieswithintheregionaswellaswiththecountriesoutsidetheregion.ThesearetheGulfCooperationCouncil(GCC)(1981),theArabMaghrebUnion(AMU)(1989),andtheGreaterArabFreeTradeArea(GAFTA)orthePanArabFreeTradeAgreement(PAFTA)(1997),aswellasthere,aresomecollaborationswiththeAfricanstates,theEuropeanUnion(EU)(Euro-MediterraneanAssociationAgreements)(1995),theUnitedStates(US)(MEFTAinitiative)(2003),Turkey,andCanada(Miniesyetal.,2004).Furthermore,themajorityoftheMENAcountries(Qatar,Kuwait,Bahrain,theUnitedArabEmirates,Oman,SaudiArabia,Djibouti,Egypt,Jordan,Mauritania,Morocco,andTunisia)aremembersoftheWorldTradeOrganization(WTO).However,theintegrationoftheMENAregionintotheglobalproductionsystemisratherweakbecausetheimplementationoftheseagreementsandcollaborationscanbeinsufficient(SaidiandPrasad,2018).Therefore,itcanbearguedthatbenefitsfromtradecannotbeefficientlyrealized.

Ourresearchquestionsarerelatedtothetrade-growthnexusofliterature.Eventhoughthetrade-growthnexusishighlydiscussedformanyregionsandcountries(Frankeletal.(1996)forEastAsiancountries;Dijkstra(2000)forLatinAmerica;Woosteretal.(2008)fortheEU;ZhaoandWang(2009)forChina),thetopicisdiscussedinalimitednumberofstudiesfortheMENAregion.KaramandZaki(2015)indicateapositiveassociationbetweenthetradeofalltypesofproductsandtherealGDPfortheMENAregion.DelPreteetal.(2018)furthercalculatetheGVCparticipationofNorthAfricancountriesandsuggestthatincreasingtheGVCparticipationofthesecountriescanbenefittheirindustries.Unfortunately,theempiricalliteratureisquitelimited.Therefore,wecontributetotheliteraturebyusingnewlydefinedtradeinvalue-addedstatisticsandprovidingadetailedempiricalanalysisofthegrowthimpactofthetradeflowsintheMENAregion.

Giventhesefindingsintheliteratureandtofulfillthegapinpolicydiscussion,ourresearchismainlyguidedbythefollowingquestions:

•IsthereanyspecifictradepatternoftheMENAregionwithintheregion(intra-MENA)andwiththerestoftheworld?

•Doesthisspecificpatternstimulategrowth?

3

Inlightofthesequestions,wefirstinvestigatethetradepatterns,thatisthebackward(import)andforward(export)integrationoftheMENAregionbydividingtheregionintothreemajorparts(theNorthAfricanpart,theGulfCooperationCouncil(GCC),andtheotherMiddleEastpart),aswellasconsideringdifferenttradingpartnerssuchastheMENA,NorthAfrica,theGulfCooperationCouncil(GCC),theotherMiddleEast,theEU,theUnitedStates,China,otherdeveloped,andotherdevelopingviatheEORAdatabasefortwoagriculture,onemining,tenmanufacturing,andtwelveservicesectorsfrom1990to2015.3Havingobservedthespecifictradepatterns,weanalyzethegrowthimpactsoftradewiththesecountrygroupsorcountries.

OurgraphicalillustrationsindicatethatwhilethesharesoftheEU(themajortradingpartnerwithashareover30%)andotherdevelopedcountriesinalltypesoftradedecrease,theshareoftheotherdevelopingcountriesinallkindsoftradeandtheshareofChinainintermediatetradeincrease.OurestimationresultssuggestthatwhilethegrowthofthemanufacturingsectorscanbepromotedbyincreasingforwardGVCparticipationwithallgroupsorcountries,thegrowthoftheservicesectorscanbeboostedbyanincreaseinforwardGVCparticipationwithonlyChinaandotherdevelopingcountries.AnincreaseinbackwardGVCparticipationwiththeEUandtheUSbenefitsallindustries.WithintheMENAregion,weobserveastrongheterogeneityintermsoftradepartnersandflow.WearguethatallthesefindingshelppolicymakerstoshapefuturetradepoliciestoenhancetheprosperityoftheMENAcountries.

Thestudyisorganizedasfollows.Thenextpartintroducesthedata,andthethirdpartexplainsthemethodology.Thefourthpartpresentstheresultsoftheanalyses,andthefinalsectionconcludesthepaper.

2.Data

Weemployavarietyofdifferentdatabases.OurmaindatabaseEORAprovidesglobalmulti-regionalinput-outputtablesincludingtwoagriculture,onemining,tenmanufacturingsectors(food&beverages;textilesandwearingapparel;woodandpaper;petroleum,chemicalandnon-metallicmineralproducts;metalproducts;electricalandmachinery;transportequipment;othermanufacturing;recycling;andconstruction),andtwelveservicesectors(education,healthandotherservices;hotelsandrestaurants;retailtrade;wholesaletrade;transport;others;maintenanceandrepair;postandtelecommunications;publicadministration;financialintermediationandbusinessactivities;privatehouseholds;andelectricity,gasandwater)of186countriesincluding19MENAcountries(seeTableA1inappendix)from1990to2015(Lenzenetal.,2012,2013).Wegroupthemintothreemainsectors:(i)manufacturing,(ii)service,and(iii)agricultureandmining.BasedonthedefinitionsoftheUnitedNationsagenciesandprograms,theMENAregionconsistsofAlgeria,Bahrain,Djibouti,Egypt,Iran,Iraq,Jordan,Kuwait,Lebanon,Libya,Mauritania,Morocco,Oman,SaudiArabia,Syria,Tunisia,Turkey,theUnitedArabEmirates(UAE),andYemen.

3Thelatestyearis2016intheEORAdataset.Wechoosenottoincludethelastyearbecauseweobserveaveryhighjumpinthedataforaggregatetradevalues.

4

Followingthevalue-addeddecompositionmethodindicatedinWangetal.(2017),wecalculatedomesticvalue-addedembeddedinexportandforeignvalue-addedembeddedinimportstoavoiddoublecountingproblemsandtodetectthetruedomesticvaluecreatedbythesectors.Inotherwords,ourtrademeasures,intermediateexport,finalexport,andintermediateexport,areindomesticorforeignvalue-addedterms,notconventionalgrosstradestatisticsincludingbothdomesticandforeignvalue-added.Wealsotakevalue-added,grossfixedcapitalformation,andlaborcompensationfromthisdatabase.Wecalculatecapitalstockbyutilizingtheperpetualinventorymethod.TheinitialcapitalstockvaluesaretakenfromtheInternationalMonetaryFund(IMF,2020).Thecountry-levelinitialcapitalstockissplitacrossindustriesaccordingtothevalue-addedsharesofsectorsinthetotaleconomy.Industry-specificdepreciationratiosaretakenfromthemethodologynotesoftheWorldInput-OutputDatabase(WIOD)(Erumbanetal.,2012).InvestmentvaluesaregivenasgrossfixedcapitalformationintheEORA26database.Wethencalculatethesectoralcapitalstockforeachcountrysector.Capitalintensityiscalculatedasaratioofcapitalstocktolaborcompensation.

WeusetheaverageyearsofschoolingoftheadultpopulationincountriesfromtheOurWorldinData(BarroandLee,2013;LeeandLee,2016;andtheHumanDevelopmentReportoftheUnitedNationsDevelopmentProgram(UNDP,2021)).WeusepopulationintheCentred’ÉtudesProspectivesetd’InformationsInternationales(CEPII)database.WeemploythepolityindexinthePolityVdatabasetoconsidertheinstitutionalqualityofthecountries(MarshallandGurr,2020).Thepolityindexrangesfrom-10meaningstronglyautocraticto+10meaningstronglydemocratic.Wetakeforeigndirectinvestment(FDI)stockasashareofGDPfromtheUnitedNationsConferenceonTradeandDevelopment(UNCTAD,2021).WealsousetheGDPdeflatorintheWorldBanktoconvertnominalvaluestorealones.

Figure1belowillustratesthesharesofeachcountrygrouporcountriesintheintermediateexportoftheMENAregion.TrendsshowthatwhilethesharesofintermediateexportstoChinaandotherdevelopingcountriesincreasethroughtheperiod,thesharesofintermediateexportstotheEUandotherdevelopedcountriesdecrease.ThesharesoftheUnitedStatesandtheMENAregionarestable.Figure2demonstratesthesharesofeachcountrygrouporcountryinthefinalexportoftheMENAregion.TrendsshowthatwhilethesharesoffinalexportstoGCC,otherMiddleEast,andotherdevelopingexpandthroughtheperiod,thesharesoffinalexportstotheEU,theUnitedStates,andotherdevelopedcountriesdiminish.ThesharesoftheNorthAfricanpartandChinaarestable.

5

Figure1.Shareofintermediateexport(%)oftheMENAbycountrygroups

2.Share

MENA

Figureoffinalexport(%)ofthebycountrygroups

Figure3presentsthesharesofeachcountrygrouporcountriesinintermediateimportsoftheMENAregion.TrendsshowthatwhilethesharesofintermediateimportsfromChinaandotherdevelopingcountriesgrowthroughtheperiod,thesharesofintermediateimportsfromtheEU,

6

theUnitedStates,andotherdevelopedcountriesdecrease.ThesharesofNorthAfrica,GCC,andotherMiddleEastarestable.

Figure3.Shareofintermediateimport(%)oftheMENAbycountrygroups

EU

otherDeveloping

otherDeveloped

china

unitedstates

otherMiddleEast

GCC

NorthAfrica

year

Allinall,theEUappearstobethemaintradepartneroftheMENAregionregardlessofthetypesoftradeflows(over30%).Forintermediateexports,finalexports,andintermediateimports,tradewithotherdevelopinganddevelopedcountriesreachessubstantialshares.Forfinalexports,intra-regionaltradehasacrucialshareintheMENAregion.Whenweconsiderthecompositionoftradeaccordingtotradepartnersovertheyears,wenoticethatwhilethesharesoftheEUandotherdevelopedcountriesinalltypesoftradetendtodecrease,thesharesoftheotherdevelopingcountriesinallkindsoftradeandtheshareofChinainintermediatetradetendtoincrease.Table1presentsthesummarystatisticsofvariablesutilizedineconometricanalysis.AmongthethreegroupsintheMENAregion,theGCChasthehighestsectoralgrowthrateonaveragecomparedtoNorthAfricaandotherMiddleEastparts.WhileonaveragetheGCCtradeswithintheMENAregionatmost,NorthAfricantradeswithothercountriesatmost.Amongthesetradeflows,theintermediateimportsfromandexportstotheEUcapturethehighestratios.

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Table1.Summarystatistics

Other

MENA

NorthAfrica

GCC

MiddleEast

Variables

Obs.

Mean

Obs.

Mean

Obs.

Mean

Obs.

Mean

Value-addedgrowth

10,855

7.53

3,753

6.78

2,845

8.39

4,257

7.63

Intermediateexport/Value-added(MENA)

10,669

1.66

3,736

1.02

2,776

2.16

4,157

1.90

Finalexport/Value-added(MENA)

10,758

2.93

3,747

1.19

2,822

4.43

4,189

3.49

Intermediateimport/Value-added(MENA)

10,825

2.18

3,753

1.40

2,845

2.32

4,227

2.78

Intermediateexport/Value-added(NorthAfrica)

10,699

0.19

3,698

0.26

2,788

0.08

4,213

0.21

Finalexport/Value-added(NorthAfrica)

10,781

0.32

3,727

0.42

2,835

0.10

4,219

0.37

Intermediateimport/Value-added(NorthAfrica)

10,800

0.34

3,727

0.41

2,845

0.18

4,228

0.39

Intermediateexport/Value-added(GCC)

10,690

0.80

3,732

0.22

2,762

1.43

4,196

0.90

Finalexport/Value-added(GCC)

10,749

1.83

3,740

0.44

2,818

3.25

4,191

2.12

Intermediateimport/Value-added(GCC)

10,803

0.70

3,746

0.27

2,817

1.03

4,240

0.85

Intermediateexport/Value-added(OtherMiddleEast)

10,697

0.61

3,740

0.48

2,817

0.59

4,140

0.76

Finalexport/Value-added(OtherMiddleEast)

10,767

0.67

3,748

0.26

2,828

0.87

4,191

0.91

Intermediateimport/Value-added(OtherMiddleEast)

10,808

1.06

3,753

0.64

2,843

0.91

4,212

1.53

Intermediateexport/Value-added(EU)

10,703

5.33

3,656

9.92

2,817

2.65

4,230

3.15

Finalexport/Value-added(EU)

10,736

2.77

3,642

4.24

2,838

1.42

4,256

2.41

Intermediateimport/Value-added(EU)

10,823

10.71

3,727

11.37

2,845

8.32

4,251

11.72

Intermediateexport/Value-added(UnitedStates)

10,776

1.22

3,731

1.51

2,821

1.55

4,224

0.74

Finalexport/Value-added(UnitedStates)

10,741

0.51

3,727

0.45

2,789

0.56

4,225

0.53

Intermediateimport/Value-added(UnitedStates)

10,822

1.87

3,745

1.36

2,840

2.51

4,237

1.88

Intermediateexport/Value-added(China)

10,734

0.58

3,728

0.41

2,802

0.07

4,207

0.47

Finalexport/Value-added(China)

10,764

0.05

3,723

0.03

2,845

1.08

4,239

0.06

Intermediateimport/Value-added(China)

10,795

1.18

3,743

0.80

3,743

0.80

4,207

1.60

Intermediateexport/Value-added(OtherDeveloped)

10,855

1.84

3,753

1.38

2,845

3.47

4,257

1.15

Finalexport/Value-added(OtherDeveloped)

10,855

1.06

3,753

0.95

2,845

1.71

4,257

0.72

Intermediateimport/Value-added(OtherDeveloped)

10,855

3.06

3,753

2.01

2,845

3.53

4,257

3.67

8

Table1.Summarystatistics(contd.)

Intermediateexport/Value-added(OtherDeveloping)

10,734

2.94

3,713

2.14

2,845

4.34

4,176

2.71

Finalexport/Value-added(OtherDeveloping)

10,795

2.39

3,729

1.32

2,841

3.20

4,225

2.80

Intermediateimport/Value-added(OtherDeveloping)

10,821

5.02

3,741

3.25

2,839

5.22

4,241

6.43

Capitalintensity

10,855

9.39

3,753

10.12

2,845

5.71

4,257

11.21

Schoolingyears

10,855

5.88

3,753

4.88

2,845

7.48

4,257

5.68

Populationgrowth

10,855

2.70

3,753

1.81

2,845

4.38

4,257

2.36

Polityindex

10,855

-3.91

3,753

-3.99

2,845

-8.37

4,257

-0.85

FDI/GDP

10,855

25.62

3,753

27.62

2,845

22.40

4,257

26.02

Notes:Value-addedgrowth,alltradeshares,populationgrowth,andFDIsharesareinpercentages.

9

3.Methodology

ToexaminethesecondquerythatweraisedintheIntroductionpart,weemploythefollowingempiricalmodeltodecidewhethertradewithspecificcountriesorgroupsmattersforsectoralgrowth.

VA_gc,s,t=Y0+Y1VA_gc,s,t−1+Y2TTadec,s,t+Y3Sc,s,t+Y4Cc,t+Y5Tt+εc,s,t(1)

wherec,s,andtstandforthecountry,sector,andyear,respectively.VA_gc,s,tandVA_gc,s,t−1standsforlevelvalueandone-yearlagvalueofvalue-addedgrowthofcountry-sectorpair,respectively.TTadec,s,trepresentsavectorofspecifictradesharesofthecountrysectorintheMENAregionwithaspecificcountryorcountrygroupssuchastheMENA,NorthAfrica,theGulfCooperationCouncil(GCC),theotherMiddleEast,theEuropeanUnion(EU),theUnitedStates,China,otherdeveloped,andotherdeveloping.Wedifferentiatetradeasintermediates,thatisglobalvaluechain(GVC)relatedpart,andfinals,thatisnon-GVCpart.Sc,s,tsignifiesthecapitalintensitycalculatedasadivisionofcapitalstockbylaborcompensation.Wealsocontrolsomecountrycharacteristics,Cc,t,suchastheaverageyearsofschooling,populationgrowth,polityindex,andforeigndirectinvestmentstockassharesofGDP.Ttstandsforyeardummies.

Totakethebusinesscyclesintoaccountandtosmooththevariables,weemploy5-yearmovingaveragesofallvariablesinourmodel.ThedynamicpaneldatamodelisestimatedbyutilizingtheSystemGeneralizedMethodsofMoments(SGMM)proceduretogetconsistentandefficientestimatesandtosolvepossibleautocorrelation,endogeneity,andunobservableheterogeneityproblems(ArellanoandBover,1995;BlundellandBond,1998;Roodman,2009).Thelaggeddifferencesareusedasinstrumentsinlevelequationswhereasthelaggedlevelsofvariablesareutilizedasinstrumentsinthedifferenceequations.4Inallspecifications,weobtainvalidprobabilitiesofHansenteststatisticsandAR(2)values.5

4.Results

ThispartrepresentstheSGMMestimationresultsofthegrowthmodelforall,manufacturing,serviceaswellasagricultureandminingsectors,separately(Tables2-5).Table2presentstheresultsofthetotalsamplebyconsideringninemaintradinggroupsorcountries(MENA,GCC,NorthAfrica,otherMiddleEast,EU,UnitedStates,China,otherdeveloped,otherdeveloping)throughcolumns1to9.TheestimationresultssuggestthatanincreaseinintermediateexporttotheMENA,theGCC,theUnitedStates,China,otherdeveloped,andotherdeveloping(asa

4Weemployonelagforthetotalsamplewithoutthe“collapse”command.Weemploythefirst19,24,and3lagsofvariablesasinstrumentalvariablesformanufacturing,service,andagricultureandminingsectorswith“collapse”command,respectively.

5Weconductseveralrobustnesschecks.First,weusethelevelofvariablesinsteadofthe5-yearmovingaveragesofthem.Second,weexcludeYemen,Syria,andIraq,wheretherehavebeenintenseconflicts.Third,wesubsetmanufacturingsectorswithoutconstructionandsubsetservicesectorswithoutelectricity,gasandwater.Fourth,weincludeChina’stradesharesintotalworldtradetoconsidertheChineseshock,thatisChineseaccessiontotheWTO.Inallthesefourdifferentsensitivityanalyses,wereachnearlythesamefindings.Theresultsareavailableuponrequest.

10

shareofvalue-added)significantlypromotevalue-addedgrowthoftheMENAsectors.Thesamepositiveimpactisvalidonlyforthefinalexporttootherdevelopedcountries.Onthecontrary,finalexportstotheEUandUSdonotseemtobenefittheMENAregion.Similartotheintermediateexport,importingintermediatesfromtheEU,theUnitedStates,andotherdevelopedcountriesenhancesthegrowthofsectors.Theseresultsprovidesubstantialevidenceforthetechnologytransferargumentfromdevelopedcountries.TheseresultscanalsobeexplainedbythedifferencesincomparativeadvantagesoftheMENAregionandothercountriesineachspecifictradeflow.Theotherimportantthingisthehighergrowtheffectsofthetradeofintermediatesratherthanthetradeoffinalproducts,whichrevealsthepotentialbenefitsofglobalvaluechainparticipation.

Whenweconsiderthecontrolvariables,wenoticethatsectoralvalue-addedgrowthisverypersistentovertime.Whilewedonotobservesignificanteffectsofcapitalintensityandforeigndirectinvestmentonthevalue-addedgrowthofsectors,thepolitymeasuresignificantlyraisesthegrowthofsectors.SincethecountriesintheMENAregiongenerallysufferfrompoliticalinstabilityandeconomicturbulencesresultingfrominternalorexternalwarsandtheArabSpring,thisresultagainemphasizestheimportanceofaninstitutionalframeworktofostergrowth.Theotherinterestingresultisthenegativeimpactofschoolingyears.Pritchett(2001)explainsthisrelationshipbyaperverseinstitutionalgovernmentenvironment,thedecreasingmarginalreturnstoeducation,andlow-qualityeducationsuchthatmoreschoolingneithercreatesanefficienthumancapitalaccumulationnortransmitsknowledgeandskills.

11

Table2.Value-addedgrowth-Allsectors

(1)

(2)

North

(3)

(4)

Other

(5)

(6)

United

(7)

(8)

Other

(9)

Other

MENA

Africa

GCC

MiddleEast

EU

States

China

Developed

Developing

Lagofvalue-addedgrowth

0.852***

(0.010)

0.846***

(0.010)

0.845***

(0.010)

0.851***

(0.010)

0.845***

(0.010)

0.842***

(0.011)

0.834***

(0.010)

0.849***

(0.011)

0.843***

(0.010)

Intermediateexport/Value-added

0.075**(0.031)

-0.579**(0.237)

0.132***

(0.041)

0.127

(0.099)

0.009

(0.007)

0.059***

(0.015)

0.078***

(0.025)

0.124***

(0.031)

0.120***

(0.027)

FinalExport/Value-added

-0.017

(0.012)

-0.017

(0.099)

-0.000

(0.011)

0.002

(0.038)

-0.015**(0.007)

-0.022*(0.013)

0.143

(0.293)

0.075**

(0.031)

-0.022

(0.020)

IntermediateImport/Value-added

-0.019

(0.020)

-0.049

(0.189)

-0.056*

(0.034)

-0.051

(0.036)

0.008***

(0.003)

0.112***

(0.022)

-0.058***(0.019)

0.030***

(0.010)

0.003

(0.006)

Capitalintensity

-0.006

(0.006)

-0.006

(0.008)

-0.001

(0.006)

-0.006

(0.006)

-0.005

(0.006)

-0.005

(0.006)

-0.007

(0.005)

-0.006

(0.006)

-0.005

(0.006)

Schoolingyears

-0.065**(0.026)

-0.052*(0.027)

-0.087***(0.029)

-0.075**

(0.029)

-0.065**(0.026)

-0.077***(0.027)

-0.038

(0.029)

-0.056**(0.028)

-0.024

(0.027)

Populationgrowth

0.004

(0.016)

0.003

(0.018)

-0.009

(0.015)

0.011

(0.017)

0.016

(0.017)

0.001

(0.016)

-0.006

(0.015)

-0.024

(0.016)

-0.023

(0.016)

Polity

0.045***

(0.012)

0.044***

(0.013)

0.044***

(0.012)

0.034***

(0.013)

0.032***

(0.011)

0.023**(0.011)

0.037***

(0.012)

0.046***

(0.012)

0.035***

(0.012)

FDI/GDP

0.001

(0.002)

0.004*

(0.002)

0.000

(0.002)

0.003

(0.002)

0.002

(0.002)

0.002

(0.002)

0.003

(0.002)

0.001

(0.002)

0.002

(0.002)

Observations

10,414

10,431

10,432

10,424

10,425

10,475

10,460

10,523

10,467

Numberofcountries-sectors

465

464

465

466

461

465

471

467

467

Numberofinstruments

465

465

465

465

465

465

465

465

465

AR(2)

0.191

0.189

0.147

0.118

0.121

0.101

0.133

0.128

0.162

Hansen(p)

0.132

0.138

0.132

0.125

0.162

0.132

0.095

0.118

0.119

Notes:Clusteredrobuststandarderrorsbycountries-sectorsinparentheses.Yeardummiesareincluded.***p<0.01,**p<0.05,*p<0.1.

12

Table3presentstheresultsofmanufacturingindustries.Theresultsarequitesimilartowhatwehavefoundforallsectors.ExportingintermediateproductstotheGCC,theEU,theUnitedStates,China,otherdeveloped,andotherdevelopingcountriesisgrowthenhancing.Intra-MENAtradeoffinalproductsinmanufacturingseemstobenefitthegrowthofthemanufacturingsectors.ThemanufacturingindustriesintheMENAregioncertainlybenefitfromparticipatingintheforwardglobalvaluechainsenablingthemtoengageinafineroperationalorganizationandsupplychainmanagementasinDeMarchietal.(2018).Similartoestimatesforallsectors,theEUandtheUnitedStatesaretheonlygrouporcountriesfromwherethegrowthoftheMENAregionbenefitsbyimportingintermediates.Thepositiveimpactoftheintermediategoodsinmanuf