Skip to Main content Skip to Navigation
Journal articles

How Does Exchange Rate Policy Affect Manufactured Exports in the Middle East and North Africa

Abstract : This paper shows that, during the 1970s and 1980s, MENA economies were characterized by a significant overvaluation of their currency. This overvaluation has had a cost in terms of competitiveness. To determine the degree of overvaluation of the MENA currencies, we developed an indicator of misalignment based on the estimation of an equilibrium exchange rate (Edwards, 1988). The empirical work was based on a panel of 53 developing countries, 10 of which are MENA economies. Although overvaluation decreased in the 1990s, probably due to flexibilization of the exchange rate regime in some MENA countries and to better macroeconomic management in others, misalignment remained higher than in other regions. This may be explained by the MENA countries’ delay in adopting more flexible exchange rates, as well as in reforming their economies. In terms of competitiveness, the estimation of an export equation has shown that manufactured exports have been significantly affected by the overvaluation of the MENA currencies. Countries that already had a more diversified economy benefited more from the decreased overvaluation in the 1990s. These countries also saw a continuous rise in diversification of their manufactured exports, resulting from the significant decline in exchange rate misalignment.
Document type :
Journal articles
Complete list of metadatas

https://halshs.archives-ouvertes.fr/halshs-03059607
Contributor : Marie-Ange Véganzonès-Varoudakis <>
Submitted on : Saturday, December 12, 2020 - 8:05:41 PM
Last modification on : Sunday, December 13, 2020 - 3:27:59 AM

Identifiers

  • HAL Id : halshs-03059607, version 1

Collections

Citation

Marie-Ange Veganzones-Varoudakis, Mustapha Kamel Nabli. How Does Exchange Rate Policy Affect Manufactured Exports in the Middle East and North Africa. Applied Economics, Taylor & Francis (Routledge), 2004, 36 (19), pp.2209-2220. ⟨halshs-03059607⟩

Share

Metrics

Record views

6