Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316065 
Year of Publication: 
2022
Citation: 
[Journal:] Review of Economics and Political Science (REPS) [ISSN:] 2631-3561 [Volume:] 7 [Issue:] 4 [Year:] 2022 [Pages:] 257-285
Publisher: 
Emerald, Bingley
Abstract: 
Purpose Effective business and investment climate can lead to a higher rate of investment, profits and improved productivity, through the creation of an institutional environment, where the state provides high-quality public goods. This study aims to explore the impact of the business-investment climate on firm performance in a sample of six countries in the Middle East and North Africa (MENA) region and Turkey. Furthermore, we extend our analysis to explore the impact of business-investment climate on the resource misallocation in Egypt and Turkey. Design/methodology/approach The study used fixed effects models to investigate the relationship between the business and investment climate, expressed by the obstacles in state-business relations- and the firm performance, which is measured by the firm's value-added, the labour productivity and the total factor productivity To reduce the endogeneity coming from possible reverse causality and the perceptions about the business climate, an instrumental variables (IV) approach applying the two-stage least squares (2SLS) method was followed. The empirical analysis relies on data derived from the World Bank Enterprise Surveys. Findings Based on estimates, the obstacles in business climate may reduce the firm performance measures by 15-40%. These findings indicate the importance of quality in the business climate and how the improvement in its efficiency can have a very considerable positive impact on firms' performance and thus on the overall economic growth of a country. Originality/value This is the first study exploring the impact of business-investment climate on various measures of the firm performance and the resource misallocation in a large sample of countries in the MENA region.
Subjects: 
Economic development
Governance
Middle East and North Africa region
Resource misallocation
State business relations
Total factor productivity
JEL: 
D73
K15
L5
O1
O43
O49
O57
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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