Exploring Lebanon's Growth Prospects

32 Pages Posted: 20 Apr 2016

See all articles by Jean-Claude Berthelemy

Jean-Claude Berthelemy

Université Paris I Panthéon-Sorbonne - Department of Economics

Sebastien Dessus

World Bank - West Bank and Gaza Resident Mission

Charbel Nahas

World Bank - Middle East & North Africa Region

Date Written: August 1, 2007

Abstract

This paper attempts to identify Lebanon's greatest constraints to economic growth, following a growth diagnosis approach. It concludes that fiscal imbalances and barriers to entry are most binding on long-term growth. Macroeconomic imbalances and related perceived risks affect the nature of investment decisions in Lebanon, in favor of liquid instruments rather than longer-term productive investments. Further, many barriers to entry discourage agents from investing in a number of markets: legal impediments to competition, corruption, and a set of fiscal incentives favoring the allocation of resources to non-tradable sectors, where potential demand and investment opportunities are scarcer. In turn, using a steady-state computable general equilibrium model, the paper assesses the long-term growth impact of a selected set of policy reforms envisaged to lift such constraints. Results suggest that 1 to 2 percentage points of additional GDP growth per year could be gained through public expenditure reform, greater domestic competition, and tax harmonization.

Keywords: Economic Theory & Research, Debt Markets, Emerging Markets, Access to Finance

Suggested Citation

Berthelemy, Jean-Claude and Dessus, Sebastien and Nahas, Charbel, Exploring Lebanon's Growth Prospects (August 1, 2007). World Bank Policy Research Working Paper No. 4332. Available at SSRN: https://ssrn.com/abstract=1010517

Jean-Claude Berthelemy

Université Paris I Panthéon-Sorbonne - Department of Economics ( email )

12 place du Panthéon
Paris, IL
France

Sebastien Dessus (Contact Author)

World Bank - West Bank and Gaza Resident Mission ( email )

P.O. BOX 54842
Jerusalem
Israel
+972 2 236 65 49 (Phone)
+972 2 236 65 43 (Fax)

Charbel Nahas

World Bank - Middle East & North Africa Region

1818 H Street N.W
Washington, DC 20433
United States

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