The effect of privatization on economic growth in the Middle East and North Africa Region The case of Egypt, Jordan, Morocco, Tunisia and Turkey (Panel Data Analysis)

Abstract

More than fifteen years have been passed since the application of privatization programs in the Middle East and North Africa region (MENA). One of the most important objectives of privatization in these countries was to enhance economic development.

This paper aims at studying the effect of privatization process on economic development in MENA region. The sample of the study concludes data collected from the five most committed and advanced countries in applying privatization policies in the region: (Egypt, Jordan, Morocco, Tunisia and Turkey).

Panel Data Analysis has been employed in order to study the statistical relationship between privatization and economic growth. The descriptive statistics indicate that privatization in MENA countries was accompanied by a growth in the levels of foreign direct investment during the period (1990-2008). The empirical evidence from Pedroni and Kao residual co-integration tests show no possible long run relationship between privatization which is represented by foreign direct investment on economic development represented by the logarithm of GDP per capita. A clear statistical relationship in MENA region between privatization and economic development couldn’t be established.

JEL: O53, L33, F63, C23

Key Words: MENA Region, Privatization, Economic Development, Panel Data Analysis.