Many countries in the Middle East and North Africa are locked in a ‘low productivity trap’ despite shifts in employment towards non-farm and non-oil sectors . This column makes the case for transformational changes in the macro-fiscal policy orientation to generate millions of new job opportunities for the growing educated youth and to improve the labour share of income to reduce poverty.
Arab countries have systematically low tax collection rates relative to the size of their economies. What’s more, with rising military expenditures and lower oil prices, the public budgets of the oil-rich states are coming under growing pressure. This column argues that the time is right for region-wide fiscal policy reforms that enact fair and progressive taxation systems.