State business relations and the dynamics of job flows in Egypt and Turkey
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State business relations and the dynamics of job flows in Egypt and Turkey Oznur Ozdamar1 · Eleftherios Giovanis2 · Sahizer Samuk3 Received: 3 September 2019 / Revised: 10 September 2020 / Accepted: 15 September 2020 / Published online: 21 October 2020 © The Author(s) 2020
Abstract Long-standing challenges concerning unemployment and the role of government have been the dominant underlying themes in the countries of the Middle East and North Africa (MENA) region. Effective State-Business Relations (SBRs) comprise a set of highly responsive and public interactions between the state and the business sector. The aim of this study is to explore the dynamics of net job creation rates in Egypt and Turkey, and the role of the SBRs, including various firm characteristics. The analysis relies on firm-level data derived from the World Bank Enterprise Surveys over the period 2008–2013. We implement the weighted ordinary least squares (OLS). Furthermore, we apply an Instrumental Variables (IV) Approach and the Two-Stage Least Squares (2SLS) method for robustness check, to deal with the potential endogeneity issues coming from the self-reported statements and the possible degree of reverse causality between SBRs and the main outcomes of interest. Our findings suggest four major obstacles to SBRs, with constraints of access to finance and credit and political instability being the common major obstacles in the two countries explored. Corruption and lack of proper infrastructure in electricity in Egypt are found to be the next two main obstacles in SBRs, while tax rates and competition from the informal sector are identified as the other two main obstacles in Turkey. The results show that obstacles in SBRs contribute negatively to the net job creation. According to these findings, policy implications include the need to make SBRs operate more efficiently, investments on proper infrastructure and policies that minimize corruption and political instability. Keywords Firm level data · Job creation · State-business relations
* Oznur Ozdamar [email protected] Extended author information available on the last page of the article
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Eurasian Business Review (2020) 10:519–558
1 Introduction Employment growth, job creation and destruction and firm productivity have been always at the centre of interest of the governments around the globe and especially in the Middle East and North Africa (MENA) region, after the great recession of 2007. The MENA region countries are characterized by strong cyclical fluctuations and have experienced significant economic and political changes, such as the Arab Spring. Given the persistently high unemployment levels in emerging and developing economies, there is an increasingly strong focus amongst the policy makers about job creation and productivity growth. Creation and destruction of jobs makes workers shift from one job to another and switch between employment and unemployment. While labor supply factors can be important, such as skills, working experience, education a
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