Middle East economies lagging behind

Middle Eastern and North African countries are failing to create employment opportunities for an estimated 100 million job-seekers due to enter the labour market in the next 20 years, according to the World Bank.

    Tens of thousands of Palestinians demand work in March 2005

    Despite their oil-powered booming economies, "strong growth [in the Middle East and North Africa] over the past two years does not change the fundamentals for this region", said World Bank Chief Economist Mustafa Nabli on Sunday.

    "We are still talking about a region with limited private sector activity and employment creation, limited integration into the global economy and strong dependence on volatile oil markets."

    Nabil was commenting on a bank report assessing economic developments and prospects in the Middle East and North Africa.

    Facts and figures

    Economic momentum in the region over the past two years averaged 5.6%, compared with growth of 3.6% in the 1990s. But the report maintained that such a pace was still not sufficient to meet demands for job creation.

    It said the economies of the Middle East and North Africa needed to become less regulated, more private sector-oriented and less dependent on oil exports.

    While the region had made impressive strides in reducing tariff and non-tariff trade barriers, "progress in improving the business climate has been the weakest in the world", the report added.

    It said that on average the countries of the region ranked in the bottom third of the world in efforts to implement a range of business regulatory and financial sector reforms.

    Alternative views

    While Egyptian economist Majdi Subhi agreed that there was a huge employment problem around the Arab world, the Ahram Strategic Studies Centre analyst said he believed economic indicators were improving.

    "People in this part of the world need to invest in their countries - even if they might get marginally better returns in other parts of the world"

    Majdi Subhi, economist, Ahram Strategic Studies Centre, Egypt

    Subhi told Aljazeera.net on Sunday that Arab governments were increasingly giving incentives to private sector business.

    "Ironically, it is highly likely that oil prices are going to remain high - which will in turn mean more employment in the public sector in the short term.

    "Additionally we are seeing a major change in the reduction of tariffs and barriers to trade and this is stimulating the private sector in the medium term. I am privately optimistic that the Arab world will avoid this doomsday scenario of 100 million young men without jobs in the new future.

    "However, one thing that needs to change is trust in government institutions. People in this part of the world need to invest in their countries - even if they might get marginally better returns in other parts of the world," Subhi added.

    Continuing debate

    But World Bank vice-president for the region, Christian Poortman, rejected Subhi's reaction, describing any success in improving economic governance as "meagre" when measured by public administration and public sector accountability.

    "The economic and regulatory reforms are creating difficulties for [Middle East and North African] governments to move forward.

    "This is precisely because the kinds of reforms which are needed also require the support and involvement of key actors such as the private sector, labour unions and other segments of civil society," Poortman concluded.

    SOURCE: Aljazeera + Agencies


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