The nexus between business–investment climate and firm performance in the Middle East and North Africa (MENA) region

Abstract

PurposeEffective business and investment climate can lead to a higher rate of investment, profits and improved productivity, through the creation of an institutional environment, where the state provides high-quality public goods. This study aims to explore the impact of the business–investment climate on firm performance in a sample of six countries in the Middle East and North Africa (MENA) region and Turkey. Furthermore, we extend our analysis to explore the impact of business–investment climate on the resource misallocation in Egypt and Turkey.Design/methodology/approachThe study used fixed effects models to investigate the relationship between the business and investment climate, expressed by the obstacles in state–business relations- and the firm performance, which is measured by the firm's value-added, the labour productivity and the total factor productivity To reduce the endogeneity coming from possible reverse causality and the perceptions about the business climate, an instrumental variables (IV) approach applying the two-stage least squares (2SLS) method was followed. The empirical analysis relies on data derived from the World Bank Enterprise Surveys.FindingsBased on estimates, the obstacles in business climate may reduce the firm performance measures by 15–40%. These findings indicate the importance of quality in the business climate and how the improvement in its efficiency can have a very considerable positive impact on firms' performance and thus on the overall economic growth of a country.Originality/valueThis is the first study exploring the impact of business–investment climate on various measures of the firm performance and the resource misallocation in a large sample of countries in the MENA region.

Public sector audit and influence the investment institutional background during a pandemic

“…In addition, an analysis of theoretical sources showed that the fight against corruption is one of the main functions and, at the same time, an integral part of the strategic vision of public sector audit (INTOSAI, 2021), which remains a significant problem in developed economies (De Jaeger, 2023;Shon & Cho, 2020;Slobodianyk, 2016), and an especially acute one in developing countries (Bastida et al, 2022;Lyrio et al, 2018). The negative impact of corruption on investment climate formation has been empirically confirmed many times (Akimova et al, 2020;Giovanis & Ozdamar, 2022;Syukri et al, 2022), which made it possible, using the experience of predecessors (Giovanis & Ozdamar, 2022;Kempf et al, 2020;Lyrio et al, 2018), to formulate the third study 1. study theoretical sources on the study topic, 2. develop a methodological approach to assess the impact of public audit on investment climate formation in the COVID-19 pandemic, 3. test the developed approach to assessing the impact of public audit on investment climate formation in the COVID-19 pandemic on the example of public audit organizations in the national economies of the former Soviet Union (Russia, Kazakhstan, and Ukraine), 4. test the previously formulated study hypotheses.…”