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This study uses multivariate cointegration and variance decomposition techniques to investigate the causal relationship between government expenditures and economic growth for Egypt, Israel and Syria, for the past three decades. When testing for causality within a bivariate system of total government spending and economic growth, we find bi-directional causality from government spending to economic growth with a negative long-term relationship between the two variables. However, when testing for causality within a trivariate system -the share of government civilian expenditures in GDP, military burden and economic growth -we find that the military burden negatively affects economic growth for all the countries, and that civilian government expenditures cause positive economic growth in Israel and Egypt.Classification: O23, O53, H50, N15.

This paper examines the causal relationship between financial development and economic growth for six Middle Eastern and North African countries (Algeria, Egypt, Israel, Morocco, Syria, and Tunisia), within a quadvariate vector autoregressive framework. We employ four different measures of financial development and apply the augmented vector autoregression vector (VAR) methodology of Toda and Yamamoto to test for Granger causality. Our empirical results strongly support the hypothesis that finance leads to growth in five out of the six countries. Only in Israel could weak support be found for causality running from economic growth to financial development but no causality in the other direction. These findings suggest the need to accelerate the financial reforms that have been launched since the mid 1980s and to improve the efficiency of these countries' financial systems to stimulate saving/investment and, consequently, long-term economic growth. Copyright � 2008 The Authors. Journal compilation � 2008 Blackwell Publishing Ltd.

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The socio-economic situation of the Arab-Bedouin population in the Negev is examined in light of the general Israeli Arab population. Based on the Galilee Society's social survey for 2004 Israeli Arab poverty incidence was found to be 52 % with nearly two-thirds in persistent poverty. Among Bedouins living in villages unrecognized by the Israeli government poverty incidence was nearly 80 %, and poverty severity, as measured by the Sen-Poverty index, was as high as seven times than that among the mainstream population in Israel, i.e., the Jewish population (excluding the-predominantly poor-ultra orthodox Jews). Similarly to international evidence, we found that education, age, family size, employment, and occupation of the household head and the number of income earners in the family are important determinants of the probability of being poor. We show that the rapid increase of Arab women's student enrollment rates not only reduced the education gap compared to Arab men but importantly adds to poverty reduction through various channels. Bedouin households, especially in the unrecognized villages, were found to have much less access to infrastructure compared to other Arabs, thus implying that the lack in infrastructure forms a significant barrier to women's participation in the labor force. This was also found to have an adverse indirect effect on the completion of schooling, and indirectly on mothers' fertility, keeping it relatively high by reducing education's potentially diminishing effect on poverty. A considerable mismatch between skills and employment was found