Demographics in MENA countries: a major driver for economic growth

Yeganeh Forouheshfar, Najat El Mekkaoui and Hippolyte d'Albis
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Najat El Mekkaoui: Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, IRD - Institut de Recherche pour le Développement, PSL - Université Paris Sciences et Lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, DIAL - Développement, institutions et analyses de long terme

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Abstract: MENA region is undergoing rapid demographic transition, where 50% of the population is under the age 25 and high youth unemployment rates are argued to be one of the main sources of political instability. Fighting youth ex- clusion from work is one of the main challenges in the region. In this paper we evaluate the economic impact of the demographic transition for selected coun- tries which experience di_erent speeds of transition, namely: Iran, Morocco and Egypt. The impact of demographic shift on the evolution of human capital stock and physical capital stock, has been highlighted by the literature. Since _nan- cial markets play a crucial role to allocate capital and channel the funds to the productive sector, it is hence fundamental to take into account the role of the _nancial markets in the growth process associated with demographic change. We have developed a general equilibrium overlapping generations model with a cost for capital mobilisation as a proxy for _nancial markets' e_ciency. We have found that the demographic shift will be an important driver for growth in the upcoming decades. Furthermore, our results show that a more e_cient _nancial sector leads to better economic performance. Speci_cally, youth are the primary bene_ciaries: an increase in the _nancial sector e_ciency can reduce up to 8 percentage points of the youngest age group unemployment.

Keywords: Financial efficiency; Development; MENA region; Demographic transition (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-ara and nep-gro
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Related works:
Journal Article: Demographics in MENA Countries: A Major Driver for Economic Growth (2020)
Working Paper: Demographics in MENA Countries: A Major Driver for Economic Growth (2020)
Working Paper: Demographics in MENA Countries: A Major Driver for Economic Growth (2020)
Working Paper: Demographics in MENA countries: a major driver for economic growth (2019)
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