The World Bank expects growth to increase in Middle East and North Africa to 3.1% in 2018, up from 2% in 2017. However, the MENA region faces challenges which could dampen regional growth. In this respect, during a workshop jointly organized by FEMISE and the Economic Research Forum, in collaboration with Universities of Paris Dauphine, ENS, Paris-Sciences-et-Lettres which took place on June 21-22 in Paris, three participants shared their vision related to growth in the MENA region in an interview with Ecomnews Med.
To begin with, Mr. Isaac Diwan (Paris Sciences et Lettres and Colombia University) explained that within the Middle East, “some firms receive privileged treatment from the government.” As a result, “when these big firms, that have very good access to capital, enter a sector, the middle-sized firms disappear in the sector”. The latter becomes “polarized between some big firms that are not very efficient and an informal market”. As a consequence, “the sector overall growth is less“.
Another factor that can hamper growth in the MENA region is the economic and political climate. Ms. Ghada Tayem (University of Jordan), specialized in the case of Jordan, declared that the country was affected by “the global recession” but also by the “refugee problem”, since the country is “receiving refugees from Iraq and Syria”.
Moreover, “policy makers have not designed great policies to create jobs and employment.” she added. As a result, Jordan has been “suffering from low growth and high unemployment, especially among the young and educated, during the past 10 years.”
The government could encourage local firms
Last but not least, the business climate could be an obstacle. In Egypt for instance, “after the Revolution, a lot of economic indicators changed and the country lost a lot of trust in investment”, explained Ms. Nesma Ali (Düsseldorf Institute for Competition Economics).
Then, what should be done to regain trust again in the investment climate? Ms. Ali clarified that there is a need to improve the business environment of the country.
The main growth perspective in Egypt is “how to induce innovation and investment in the country”. Another way is trying to “enhance local private sector and local production.” The government could encourage local firms to be more productive, to export, and enable them to become competitive “locally and internationally”.
Obviously, she emphasized that achieving these goals is challenging because it depends on several factors, and issues that need to be addressed in the country like the “lack of innovation, the limited “access to finance”, and poor education skills of managers and employees”. Also, “the informal sector” is weighing on the country. Ms. Ali estimated however that by taking into consideration all of this, it is possible to reach a very good growth level.
Ms. Ali’s proposals regarding innovation and private sector development concur partially with World Bank vision. According to the World Bank Economic Monitor Report for April 2018, the projected increase in growth rate in the MENA region needs to be leveraged by fostering innovation, job creation among youth and by strengthening private sector development and its partnership with the public sector
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