Shireen AlAzzawi

Innovation, productivity and foreign direct investment-induced R&D spillovers

This article examines the effect of foreign direct investment on innovation and productivity in the host and home countries. I investigate how the flows of knowledge transmitted through FDI affect the production of knowledge in both source and recipient countries, as well as how these flows affect productivity. Using patent citations within FDI as the measure of the degree of ‘access’ that one nation gains to the R&D knowledge of another, and new patents as the measure of innovation, results reveal that there are large differences in the way FDI affects innovation and productivity between countries that are technological leaders, and technological followers. Both inward and outward FDI are found to have a strong positive effect on domestic innovation and productivity in countries that are technological followers. For technological leaders, outward FDI is highly conducive to increased domestic innovation, while inward FDI seems to increase competition between domestic and foreign firms, making it more difficult to come up with new viable ideas. As for domestic productivity, inward FDI is highly beneficial for technological leaders, while outward FDI does not have a significant effect. I conclude that technological followers have much to gain from FDI-induced R&D spillovers, and therefore governments in these countries will find it worthwhile to attract foreign multinationals, while those in the more technologically advanced economies need to weigh the costs and benefits of FDI carefully.

Trade liberalization, industry concentration and female workers: the case of Egypt

The gender wage gap increased significantly in Egypt over the last two decades, while female labor force participation rates have steadily declined. This study investigates the relationship between women’s labor market outcomes in the manufacturing sector, the degree of industry concentration, and the trade reforms that took place simultaneously. Results indicate that industry concentration is detrimental to women in the labor market and that the impact of trade liberalization differs depending on the degree of concentration and the nature of the international competition. In initially competitive industries, increased import competition is associated with higher gender wage gaps and lower female employment. Increased export intensity on the other hand is associated with a lower gender wage gap, but lower female employment. Conversely, opening up to increased international import competition in initially concentrated industries is associated with falling gender wage gaps and rising female employment, while increased exports in these industries is associated with higher female employment as well. These findings have important implications for policy makers attempting to create more equitable labor market conditions in post-revolutionary Egypt.JEL classificationsF1, F6, J7, J3

Multinational Corporations and Knowledge Flows: Evidence from Patent Citations

This study investigates whether foreign direct investment (FDI) by a multinational corporation increases the likelihood that knowledge about new technologies and production processes will be exchanged between foreign and domestic firms. This could be an important channel for knowledge diffusion since such flows have proven to be highly geographically localized. I develop a framework for measuring the degree to which the close proximity of a multinational subsidiary can enhance flows of knowledge between firms of different countries. I use an original data set on the innovative activity of firms of more than 30 countries and find a strong positive effect of both inward and outward FDI on knowledge flows. Interestingly, I find that countries that are technological followers gain three times as much knowledge from inward FDI as leaders.

Do Endowments Matter? Exploring The Gender Dimensions Of Poverty In Egypt

This paper investigates the gender dimensions of poverty in Egypt and examines the factors that contribute to poverty for different household types. Furthermore, it decomposes the poverty differential between household types into a component due to endowments and another due to the return to these endowments. I use data from five Household Income, Expenditure and Consumption Surveys, that span a period of far reaching economic, social and political changes, from 1999 to 2013. Results suggest that female‐headed households were poorer than male‐headed households for all years under study in urban areas; and slightly less poor over part of the period in rural areas. This difference is greater for widowed mothers. Most of the poverty differentials between female‐headed and male‐headed households cannot be explained by differences in endowments in all years. In fact, if female‐headed households had the same endowments as male‐headed households in urban areas they would have been poorer than they already were.

How Muslims Understand Democracy: An Empirical Investigation

This study examines how Muslims understand democracy and its essential components. We hypothesize that, although Muslims tend to value democracy as high as non-Muslims, Muslims may have a unique understanding of procedural, as well as substantive, components of democracy, which is significantly different from non-Muslims. Employing the latest data from World Values Survey, our descriptive statistics suggest that while Muslims highly value democracy, and believe they don’t have enough of it, their notion of democracy is distinct from that of non-Muslims. Muslims tend to associate democracy with its perceived outcomes, and do not have a substantial reservation against the interference of the army or religious authorities in the governing process. On the other hand, they view procedural aspects of democracy, such as elections, civil rights and gender equality, as less essential than their non-Muslim counterparts. We then use ordered logit regression model, controlling for various macro-, as well as micro-level determinants of democracy. Our regression results show that the determinants of Muslims’ attitudes towards democracy, and its different notions, are considerably distinct from those of non-Muslims.

Dynamics of Multidimensional Poverty and Trade Liberalization: Evidence from Panel Data for Egypt

This chapter investigates the dynamics of poverty in Egypt using monetary and non-monetary panel data, and the impact of trade liberalization on poor and low waged workers. We find a relatively low level of economic mobility in both income and non-income indicators, with the majority of those who were “poor” in 1998, whether in the monetary or non-monetary dimension, remaining so by 2006. Trade reform in the form of lower tariffs and increased export promotion exerted a small positive influence on the incomes of the poor; however, this came at the expense of greater informalization of workers and higher incidence of low quality jobs. We also find that private sector employment and gender have a much more important role in segregating the labor market.

Asset Inequality in MENA: The Missing Dimension?

The vast majority of existing studies gauging economic inequality rely on current household income or consumption expenditures. Since wealth is distributed more widely across households, and household wealth is related positively to income and consumption, overall inequality is likely to exceed inequality measured by income or consumption alone. Wealth should thus be included in the measurement of inequality, in tandem with them. Moreover, since wealth is not only an outcome but a productive factor and an important driver of lifetime opportunities of all household members, it is important to understand its distribution across households in different demographic groups, countries and points in time. This study examines economic inequality in four MENA countries – Egypt, Ethiopia, Jordan and Tunisia – using measures of wealth based on productive and non-productive household assets (including livestock, farm equipment and capitalization of firms owned by households), and using high-quality partially harmonized panel surveys. In Egypt and Ethiopia, household wealth and its distribution is tracked across multiple survey waves of the Egyptian Labor Market Panel Survey and the Ethiopian Socio-Economic Survey. This is done by applying the relative prices of all assets from benchmark years to other years. The study reports the degree of inequality in the wealth index within countries, and across regional and other demographic dimensions. Comparisons of wealth distributions across countries, and their evolution over time (in Egypt and Ethiopia) are made, and implications for households’ welfare are discussed. Wealth distribution is juxtaposed with the distribution of household wage earnings or consumption to gauge the degree of multidimensional inequality, and the relationship between productive and non-productive assets is estimated.

Did the Cost of Living Rise Faster for the Rural Poor? Evidence from Egypt

Inflation has been rising in Egypt over the last decade once again reaching double digit levels, and this has been a top concern for large segments of society. Furthermore, inflation in this period hit the rural areas harder, which is unusual for the Egyptian economy. Rising food prices were a major factor behind higher prices over this period. Since the poor spend more of their budget on necessities than the rich it is plausible to expect that the cost of living might have increased faster for households at the lower end of the income distribution over this period, and especially those residing in rural areas. Rising prices, as measured by the Consumer Price Index (CPI), do not accurately measure changes in the cost of living. When inflation is high, people resort to substitution to hedge themselves against a declining standard of living. To accurately monitor changes in the cost of living, variations in the cost of attaining a given utility level, not a fixed basket of goods, should be measured. We construct True Cost of Living Indices and use them to examine whether households at different income and expenditure levels experienced different rates of cost of living changes, and whether one group consistently fared worse than the others. We also examine the extent of the substitution bias in the CPI and how it might affect the measurement of key economic variables when compared over time.