Does Investment Climate Explains MENA Low Productive Performance of the Manufacturing Industry?

International audienceDrawing on the World Bank enterprise surveys, this paper shows that the investment climate (IC) is correlated with firms’ technical efficiency (TE) in eight manufacturing industries of 22 developing countries. Essential aspects of the investment climate include the quality of infrastructure, the experience and education of the labor force, the cost of and access to financing, as well as different dimensions of government-business relations. The empirical analysis also illustrates that the deficient IC in many countries in the Middle East and North Africa (MENA) is associated with low TE. The exception is Morocco, and to some extent Saudi Arabia, where the IC and TE rank close to that of the most efficient economies of the empirical sample. The paper also highlights that industries more exposed to international competition, as well as small and medium domestic firms in some branches, exhibit a higher sensitivity to IC limitations