Monthly Archives: June 2014

The pursuit of happiness in the Mediterranean

FEM3414_picThe pursuit of happiness, it’s a serious matter. So much so that the leading economists members of FEMISE have studied the issue. They scrutinized the factors that lead to well-being in the latest report FEM34-14.

 In July 2011, the King of Bhutan decided to replace GDP with Gross National Happiness (GNH), which integrates health, culture, the use of time. For the kingdom, the GNH is just as important as other economic indicators. Now, companies that choose to expand overseas take into account the human development index (HDI), a new indicator that measures quality of life. Since May 2011, the Organisation for Economic Cooperation and Development (OECD) provides an opportunity for citizens of the 34 member countries to evaluate and compare their well-being index by clicking on the OECD website. index “better life” takes into account 11 criteria (environment, health, education, work, housing …).


The French are the ones who suffer less from deprivation

In a report entitled “Evaluation of the transverse impact of consumption on the subjective well-being in the Euromed region,” the economists demonstrate the influence of economic conditions and in particular the consumption of goods and services on well-being . Consumption activities provide an opportunity for individuals to meet their needs and at the same to improve their quality of life. This very detailed report examines over 140 pages, the use of three categories of goods and services: those qualified as utilities to meet basic needs: food, clothing … Those qualified as hedonic, are intended to provide pleasure. Going to the movies, restaurants, museum, on a journey is not essential, but contributes to happiness. Finally, the “apparent” goods and services contribute to affirm the social status of people. ” If when aged 50, one does not possess a Rolex, he/she will have missed his/her life . ” Now famous, this little phrase of french advertising expert Jacques Ségéla  demonstrates how the trappings count in a consumer driven and self-image society.  Femise carried out a comparative study of the use and satisfaction of needs in the Mediterranean. It showed that the French are the ones who suffer less deprivation before Tunisians and Moroccans. In contrast, residents of Benin undergo daily hardships. The satisfaction of needs must, according to the report, be an integral part of public policy. Just as with social indices, indicators of economic production, the well-being of individuals will become increasingly important in political strategies. “Bread and circuses”! Caesar had understood before the hour, the need to feed and entertain Rome…

 Photo by Econostrum: The people of Benin undergo daily hardships. (Photo Vero).

Article par Nathalie Bureau du Colombier, Econostrum. www.econostrum.info.

Included it loved experience geneticfairness smells membership have.

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Book Launch: The Arab Spring: Implications for Economic Integration

arab spring cover frontFEMISE launched its new edited volume entitlted:” The Arab Spring: Implications for Economic Integration” and edited by Dr. Michael Gasiroek, Professor, Department of Economics, University of Sussex, UK. The edited volume is published by Vox-CEPR and include contributions from a large number of international and regional experts on the subject of economics integration.

During the launch, contributors gave some insights and views relatd to the issues they addressed in the volume. Disuccsions took place with the  participants on the recommedations and the integration policies needed with the arab spring.  The launch was attended by a large number of interested researchers and policy makers from the region and outside.

To access the  concept note and the agenda of the event click here

To read an article regarding the book launch including the recommendations, click here

Evaluation of the “Programme de mise à niveau” implemented by the southern Mediterranean countries

The aim of the present report is to evaluate policies undertaken by Algeria, Egypt, Morocco and Tunisia in order to improve modernization of their industries during the last decade. These industrial policies are considered to go with the establishment of the free trade zone between European Union countries on the one hand and the countries of south Mediterranean on the other. These policies are …nanced partially through domestic resources and MEDA funds provided by European Union.
This study has consisted in providing an overview of the whole available information about modernization’s processes conducted in each of the four considered countries through the presentation of the background permitting to appreciate and relate the genesis and the evolution of such processes. On the other hand, with the available statistical information, speci…c databases were built for each country in order to estimate the improvement of performance of fi…rms engaged in these processes. For a consistent econometric modeling the data were unavailable, mediocre or incomplete. Databases were built only for Egypt, Morocco and Tunisia. Only the Moroccan database permit construction of an adequate econometric model which shed some light on the impact of modernization programs on the performances of …rms (241 …rms). The panel data covers the period 1998-2005.Despite these statistical weaknesses, the present report leads to about 15 important issues which permit a better comprehension of the phenomena of modernization as well as their current effects.
Result 1– Weakness of institutions designated to manage and supervise programs of industrial modernization is one of the more important causes of weaknesses of these programs. The role of these institutions must be strengthened, and their duties clearly de…ned in order to guarantee an e¤ective implementation of the programs. This study shows that either the absence of o¢ cial institutions or interferences between several actors in each of the four considered countries (Algeria, Egypt, Morocco, and Tunisia) contributed deeply to a relative failure of these programs. Useless competition between institutions concerned with these programs –ministries, speci…c authorities, associations –led to dividing up the follow-up of the programs as well as high costs of transactions paid by …rms. So firms preferred to withdraw from such programs. Independence of these institutions and the establishment of a contractual environment with predetermining goals for them could lead to better e¢ ciency of modernization programs.Result 2– Absence or unavailability of o¢ cial statistics as well as imprecise follow-up of these programs handicap all attempts of serious evaluation which could guide public authorities. For these reasons, we recommend that FEMISE install a permanent unit which will observe continually the progress of modernization programs. So that legibility of undertaken actions is guaranteed. Thus this permanent follow-up permits a consistent help for decision makers. From this point of view, our work could constitute a …rst step of a global process of evaluation that must be done at regular periods.
Result 3- A strong selectivity through the establishment of too demanding criteria led to the failure of modernization programs in some countries specially Algeria. Choosing a contractual process like restructuring-transparency alternative in return of advantages and pro…t-related bonus could lead to better results. Restructuring of …rms could not be carried out on the basis of a priori criteria. Considered countries are faced to two alternatives : a) An “aggressive”targeting could urge …rms to make more attention to bearing sectors –not necessarily exporting ones –where aid could be more consistent. This is able to permit the emergence of moving forces or domestic champions. The recent trend of the European new industrial policy goes through that direction. b) A global improvement of practices of …rms by enlarging the base of aided …rms. Here, one may look for puling e¤ects of better practices by counting on modern behavior of managers. Modernization programs could be considered as means of increase of performances of industries.
Result 4– The average amount of the …nancial aid per …rm stills weak enough to impact positively performances. For example, aid varies in Morocco between 0.5 and 5 percent of sales. Initial weakness of funds leads to weak and inconsistent level of aids. Supplementary leverages had not the expected effect even after obtaining initial aids.
Result 5- The impact of modernization programs on the relation between enterprises and banking system is weak. Indeed, present functioning conditions of banking system as well as the absence su¢ cient guarantee funds have heavy consequences on …nancing investment by …rms. These di¢ culties appear even within countries which exhibit not sever macroeconomic constraints (Algeria) and others with a high gross domestic savings.
Result 6– Whatever the considered country, more or less long period of trial and error was experienced. Indeed, goals of programs and methods of applica-tion have been not understood by actors (…rms and State). Formalization of the concepts of modernization and its transcription in terms of economic policy took about a decade before taking shape. However, one must recognize the existence nowadays of a strong convergence on goals, methods and means as mentioned by the study for each country. The follow-up of the programs could lead to a sound competition in terms of results between countries of the region.
Result 7- Policies of modernization are structural conceived for the long-run. From this point of view, a global approach –like the Tunisian approach – is recommended. Such approach consists in building a strategy of restructuring of fi…rms going form management conditions to introduction on stock markets. The lack of a viable Mediterranean model of management and the ine¢ ciency of old models of management would permit to modernization policies to outline the stages of development of …rms.
Result 8- Modernization programs had not any incidence on the freeze of international specialization for the considered countries. The present mechanisms take weakly into account the aspects related to diversi…cation and emergence of …firms which carry on bearing sectors with high value added. This result is corroborated by econometric result 14 discussed below.
Result 9– Modernization programs had not any incidence on the level of investment which still weak. Accumulation of capital has not been accelerated
signi…cantly by these programs.
Result 10- The rate of desertion of modernization programs just after joining them is very high in Algeria and Morocco. This displays the weakness of
the present incentives. Weakness of the …nancial aid, multiplicity of actors, and administrative intricacies are the main causes of desertion.In relation with econometric modeling …ve results merit to be pointed out :
Result 11- Globally, when we consider the whole sample of …rms in the three countries (Egypt, Morocco and Tunisia), the univariate analysis provides a positive e¤ect of modernization programs on the growth of sales, employment and
debt. On the other hand, nuanced e¤ects on productivity, investment and exports are observed. As restructuring policies, modernization programs have not followed the usual path where rationalization of costs (layo¤s. . . ) and increase of productivity are among the main preoccupations. Firms which joined the programs looked for the con…rmation of their status at the domestic level through plans of growth which bene…t from the programs. Referring to potential growth of foreign enterprises at the time of establishment of zones of free trade is absent for the moment !
Result 12– Moroccan …rms with foreign participation have better bene…ted from impacts of modernization programs on sales, exports, employment and in-
vestment. The impact on exports is signi…cant. The relationship between restructuring and internationalization of the …rm is clearly established.
Result 13– No signi…cant results are obtained concerning the impact of the separation between ownership and control on performances of Moroccan …rms.
Globally, …rms with con…rmed separation between control and ownership bene…fited signi…cantly in terms of increase of sales and production while concentrated ones bene…ted rather in terms of exports, employment and investment. These different issues could reveal two distinct strategies of the functioning of …rms. For old …rms with family’s structure and concentrated, diversi…cation and investment opportunities were searched for through subscription to modernization programs. On the other hand, younger …rms (with separated functions) have searched to be better set up on the local ground and to increase their sales and employment level.
Result 14- Moroccan …rms with high export intensity increased their performances in terms of exports and employment when those with low export intensity remain oriented towards local markets and search to increase sales, employment level and productivity. Modernization programs did not be able to modify fi…rms’ strategies towards internationalization. On the contrary, they comforted the initial paths. Consolidation of established advantages is at the heart of their development strategies.
Result 15- Multivariate analysis presents estimation results of a …fixed effects panel data model which speci…es the impact of modernization programs on production. For this task, a sample of 241 Moroccan …rms observed over the period 1998-2005 is used. At the marginal level, coe¢ cients associated to variables which re‡ect investment and employment, respectively, are positive and highly signi…cant (1 percent level). This con…rms the expected correlations. Next, the impact of launching of modernization programs (MAN variable) is not in accordance with the expected correlation. This means that Moroccan …rms do not manage to guarantee an improvement of neither the level of sales nor productivity. When we couple this variable with some indicators re‡ecting accompaniment policies, a slightly improvement in the econometric results is detected. Essentially, combined variable MAN*INV, constructed to test whether investment is more efficient after launching modernization programs, provides a positive coefficient which is signi…cant at the 10 percent level when the dependent variable is sales and 5 percent level in the case of production. Another signi…cant result concerns the variable MAN*DIV which proves that specialization is more advantageous than diversi…cation over distinct markets.

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