Does Mena’s Governance Lead to Spatial Agglomeration?

Abstract

This paper studies the link between spatial imbalance and political governance with an emphasis on the MENA region. The agglomeration index is our indicator of spatial imbalance. We distinguish two aspects of political governance: political rights and political stability. Statistically, we find that the agglomeration rate is higher in MENA, whereas the indexes of political rights and political stability are lower in MENA compared to the rest of the world and other lower middle income countries. Using cross-sectional data for 182 countries around the world, we find that the political rights index is negatively and significantly related to the agglomeration index. Our results suggest that an improvement in MENA countries’ level of political rights to the average of the rest of the world would be associated with an agglomeration rate four percentage points lower than its average level in the region. Moreover, the data reveal an inverted-U relationship between the agglomeration rate and GDP per capita, and a negative effect of trade openness on agglomeration rate.

Keywords:

• Spatial imbalance
• agglomeration rate
• MENA