Local employment growth in the coastal area of Tunisia: spatial filtering approach

Abstract

Since the mid-1980s, Tunisia has conducted a structural adjustment program characterized by more privatization and economic opening. This transition has created unequal growth in the economic performance and the employment opportunities between coastal and interior regions (inland areas). The 14 January revolution has started as social demands against unequal employment opportunities and corruption. The identification of various factors explaining the employment growth in Tunisia's coastal area is necessary to understand regional disparities. In this study, we attempt to assess the impacts of institutional factors and industrial structures on manufacturing employment growth. We seek to answer the following key question: Why does employment grow in one region and not in other? Using panel data on five manufacturing sectors associated to 138 Tunisian coastal small localities (delegations) along six years (2002–2007), we will give some empirical evidence on regional employment growth. We use a dynamic spatial panel data model in order to consider the spatial and temporal effects in the analysis of the local employment growth. Our results show that spillovers have been found to be significantly effective only within a range of 15 km for high-tech industries and 50 km for low-tech. Our econometric result stand that agglomeration and diversity have a positive effect on the local employment manufacturing growth. However, competition has a negative effect. In addition, our results show that industrial zones do not increase employment.

Keywords:

• local employment
• spatial spillovers
• regional disparities
• spatial filtering
• Tunisia

Acknowledgement

The authors thank Robert Ferstl for making available the spatial filtering MATLAB code.

Notes

1. African Development Bank (AfDB) Group, 2012 ‘Tunisia: Economic and Social Challenges beyond the Revolution’.

2. African Economic Outlook 2012.

3. National Institute of Statistics (INS), Tunisia.

4. The Investment Code in Tunisia, Law No. 93–120 of 27 December 1993 – Act No. 2006–85 of 25 December 2006, on Finance Law for 2007 – Changes relating to the Finance Act 2007.

5. Economic Report on Africa 2010: Promoting high-level sustainable growth to reduce unemployment in Africa.

6. National Institute of Statistics – Tunisia (INS).

7. Delegation is the smallest administrative area in Tunisia for which data is available.

8. The size of an industrial zone can vary from year-to-year according to territorial planning (developing new areas or expanding existing areas).

9. FEMIP, the challenges of competitiveness and employment in Tunisia's transition to democracy, 4 July, 2012.

10. Two main programs that have been signed with the European Union aim to support firm creation, innovation, and entrepreneurship. The industrial upgrading ‘mise à niveau’ program was launched in 1996 and as part of the liberalization process and the ‘Programme de Modernisation Industrielle’ (Industrial modernization program) was launched in 2004.

11. Group of maintenance and management.

12. Youth employment and economic transition in Tunisia.