Islam, Asif M.

Development Economics, Enterprise Analysis Group
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Development Economics, Enterprise Analysis Group
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Last updated September 12, 2023
Citations 55 Scopus

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    Middle East and North Africa Economic Update, April 2020: How Transparency Can Help the Middle East and North Africa
    (Washington, DC: World Bank, 2020-04-09) Arezki, Rabah ; Lederman, Daniel ; Abou Harb, Amani ; El-Mallakh, Nelly ; Fan, Rachel Yuting ; Islam, Asif ; Nguyen, Ha ; Zouaidi, Marwane
    Due to the dual shocks of the spread of the virus and lower oil prices, World Bank economists expect output of MENA to decline in 2020. This is in sharp contrast to the growth forecast of 2.6 percent published in October 2019. The growth downgrade of 3.7 percentage points is arguably a measure for the costs associated with the dual shocks of Covid-19 and the oil price collapse. These numbers are tentative. The true impact depends on future developments of the dual shocks, policy and society’s response, which depends on the transparent use of health and economic data. We recommend a two-step approach: It might be desirable to focus first on responding to the health emergency and the associated economic contraction. Fiscal consolidation and structural reforms associated with the persistent drop in oil prices and pre-existing challenges are also very important, but with proper external support, can wait until the health emergency subsides. Nevertheless, the MENA region has challenges that predate the crisis – it has been growing far slower than its peers. Had MENA’s growth of output per capita been the same as that of a typical peer economy over the past two decades, the region’s real output per capita would be at least 20% higher than what it is today. A large part of MENA’s low growth is arguably due to a lack of transparency. MENA is the only region that dropped in data transparency and capacity since 2005. We estimate that this has cost MENA 7-14 percent in GDP per capita losses since 2005. Lack of transparency hinders credible analyses of many important issues, two of which are highlighted in the report. First, lack of data transparency hampers credible analyses on the region’s debt sustainability – an important issue to examine after the crisis. MENA countries vary greatly in their debt reporting standards. World Bank economists and other external analysts do not have access to vital information about many types of public debt. Second, the unemployment and informality numbers in the region are debatable since MENA countries rely on varying definitions of employment with little harmonization across the region or with respect to international standards. This affects analyses of unemployment and informality.
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    Data Transparency and Long-Run Growth
    (World Bank, Washington, DC, 2020-12) Islam, Asif Mohammed ; Lederman, Daniel
    For centuries states have engaged in collecting data to serve various interests. In modern times, a data gap has emerged between developing and developed economies, with the latter having more advanced data systems. The authors explore the effects of data transparency on longrun growth for a sample of mostly developing economies. Data transparency is defined as the timely production of credible statistics as measured by the Statistical Capacity Index. The paper finds that data transparency has a positive effect on real gross domestic product per capita, implying a statistically significant impact on transitional growth to a higher potential level of gross domestic product per capita. The estimates indicate an elasticity of the magnitude of 0.03 percent per year, which is much larger than the elasticity of trade openness and schooling in the estimation sample. The empirics employ a variety of econometric estimators, including dynamic panel and cross-sectional instrumental variables estimators, with the latter approach yielding a higher estimated elasticity. The findings are robust to the inclusion of several factors in addition to political institutions and exogenous commodity-price and external debt-financing shocks.
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    Taming Private Leviathans: Regulation versus Taxation
    (World Bank, Washington, DC, 2021-01) Arezki, Rabah ; Islam, Asif ; Rota-Graziosi, Gregoire
    This paper explores the interplay between concentration of wealth and policies, namely regulation and taxation. The paper exploits variation in exposure to international commodity prices. Using a global panel data set of the net worth of billionaires, the results point to a positive relationship between commodity prices and the concentration of wealth at the top. Regulation especially pertaining to competition is found to limit the effects of commodity price shocks on the concentration of wealth, while taxation has little effect. Moreover, commodity price shocks crowd out non-resource tax revenue, hence limiting the scope for income transfers and redistribution. The results are consistent with the primacy of ex ante interventions over ex post ones for addressing wealth inequality.
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    How Prevalent Are Credit-Constrained Firms in the Formal Private Sector?: Evidence Using Global Surveys
    (World Bank, Washington, DC, 2023-07-13) Islam, Asif M. ; Rodriguez Meza, Jorge
    This study develops a measure of firm-level credit constraints by leveraging refinements in survey instruments for a widely used database. Using data on more than 65,000 firms across 109 economies, the study uncovers several insights. Around 30 percent of firms in the formal private sector are credit constrained. Firms that are credit-constrained tend to be smaller and negatively correlated with performance. The more developed the economy, the lower the share of credit-constrained firms. One striking finding is that 52 percent of firms do not apply for loans as they have sufficient credit. For some economies, this may be more indicative of poor opportunities for the expansion of firms and thus the lack of demand for credit. The findings suggest that for policies that improve access to credit to be effective, they should go hand in hand with interventions that provide opportunities for firms to expand.