Abstract
This study analyses the effects of financial openness on productive efficiency and technology catch-up in four countries in the Basin (Algeria, Egypt, Morocco and Tunisia), as compared to a group of developed countries (France, Germany, Japan and the UK) over the 1985–2005 period. Using the stochastic production frontier with variable inefficiency approach (Battese and Coelli, 1995) and the metafrontier technique (Battese et al., 2004), we show that, with the exception of Tunisia, the productive efficiency of countries under consideration has continuously declined. We also identify an ever-widening technology gap for the South Mediterranean countries caused by among others, a slowdown in the opening-up of their financial markets starting from the second half of the 1990s.
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