Economic Research Forum (ERF)

December

Low social and political returns to education in the Arab world

Arab societies urgently need to start looking at how to improve education systems, not just in ways to improve the marketability of individuals but, as importantly, to improve their social and political impact on society. Drawing on evidence from the World Values Survey, this column argues for strengthening a sense of community, beefing up values of civic engagement, inculcating democratic principles, supporting gender equality and promoting social tolerance.

Replace discretion with rules to boost economic performance

A government that adopts institutional reform to increase policy credibility and enhance the degree of competition may be rewarded with improved economic performance. This column reports the experience of Turkey in the early 2000s, a period in which anti-corruption and economic reform programmes that promoted more rule-based policy-making made significant positive contributions to growth.

Brain gain from return migration: evidence from Egypt

Far from causing ‘brain drain’ in the developing world, temporary migration can lead to a ‘brain gain’ for the sending countries. This column reports research on Egypt showing that migrants acquire significant human capital while they are overseas, which increases their probability of upward occupational mobility when they return home. This provides a potential source of economic growth for their country of origin.

Unemployment and the marginally attached

While the standard definition of unemployment is useful for international comparisons, it may not be adequate for assessing the degree of labour market attachment in many developing countries. This column reports evidence from Turkey that there is a significant group of ‘marginally attached’ individuals who appear to be non-participants in the labour market but are in fact ready for employment when work is available.

Better measures of the health of Egypt’s labour market

Policy discussions about the health of Egypt’s labour market focus almost exclusively on one indicator: the unemployment rate. This column argues that the unemployment rate is a poor indicator of the cyclical performance of the economy. What’s more, it focuses attention on the plight of a very specific group of people, who are not the most vulnerable to poor labour market conditions.

Fiscal rules: how to reduce pro-cyclical public spending

Fiscal pro-cyclicality is a defining trait of many MENA countries and other emerging economies: public spending typically rises in good times and falls in bad times. This column reports research on the effectiveness of fiscal rules in countering this widespread tendency. The evidence from 120 countries over a 30-year period indicates that rules on government expenditure can reduce the pro-cyclicality of public spending by around 40% on average.

Microcredit: choosing between inclusion and impact?

The microfinance industry continues to grow rapidly in the MENA region. This column reports research from across the world showing that giving people access to microcredit does not lead to significant declines in poverty. But while microcredit is not yet a powerful anti-poverty strategy, the evidence shows that it is a useful financial tool.

A new exchange rate regime for oil-exporting countries

Currency pegs in the Gulf economies have forced monetary policy to be pro-cyclical, exacerbating the effects of swings in the oil market on the business cycle. This column proposes a new exchange rate regime for oil-exporting countries: one in which the currency is pegged to a basket that includes commodities along with currencies.

Climate change policy in MENA after Paris

The Paris Agreement on climate change has set ambitious targets for reducing the carbon footprints of the signatory countries. This column outlines the commitments and challenges for policy-makers in the Middle East and North Africa.

How to reform: lessons for MENA from post-communist transition

What can reformers in the MENA region learn from the transition experiences of the formerly communist countries of Central and Eastern Europe and the former Soviet Union? This column outlines several insights – first and foremost, that economic reforms do not succeed without political reforms.

Anti-corruption strategies: successes and failures

Countries in the Middle East and North Africa don’t typically score well in term of corruption. This column looks at anti-corruption strategies around the world to explore what might be done. Overall evidence points to an absence of monitoring as well as potential capture by governments and donors as the main reasons for the lack of success of such strategies.

Pension reform that avoids harming MENA labour markets

To tackle the deficits in their pension systems, should governments in Arab countries raise social security contributions, reduce pension levels or increase the statutory retirement age? This column summarises the results of research assessing the costs and benefits of different pension reforms in terms of their impact on different generations and on the labour market.

Most read

Egypt’s care economy needs to address deteriorating working conditions

A robust and high-quality care economy is critical for supporting women’s employment – as both an employer of women and a mechanism for redistributing unpaid care work to the market. Yet in Egypt, despite national goals of expanding care services, employment in the sector has been shrinking, while becoming increasingly privatised. As this column reports, care jobs have also experienced worsening conditions of work, including reduced formality and the emergence of a pay penalty for care workers.

Unemployment among young women in GCC countries

The average rate of unemployment among young women in the high-income countries of the Gulf Cooperation Council (GCC) is far higher than the equivalent for young men. This column reports new evidence on the extent to which flexible labour markets, in the context of a generous social contract, can reduce female youth unemployment rates in the region.

Boosting trade through flexible rules of origin in preferential agreements

Rules of origin are critical components of preferential trade agreements designed to stop products coming in under insufficient transformation or through the partner that applies the lowest tariff. But in practice, these rules are often needlessly complex, undoing the benefits of market access associated with trade agreements. This column reports research showing that the adoption of more flexible product-specific rules of origin within preferential agreements would give a significant boost to global trade.

Challenges of GCC investment in the energy transition

The countries of the Gulf Cooperation Council (GCC) have identified the energy transition as a crucial area of growth and are investing heavily in a diverse array of projects. However, as this column explains, the region faces a number of challenges in making a success of these investments, most notably its current dependence on fossil fuels, a lack of infrastructure and technical expertise, the high upfront costs, and geopolitical tensions.

The decline of social insurance in Egypt: directions for reform

The longstanding challenge for the Egyptian economy of providing its workers with decent, formal, socially insured jobs has become even more difficult. As this column explains, informality has been rising rather than falling, with a substantial reduction in social insurance coverage for the employed since the late 1990s. Reforms are needed to reverse this decline.

Social insurance in Egypt: between costly formality and legal informality

The rates of participation of Egyptian workers in contributory social insurance has continued to decline, even during times when the country has had positive annual growth rates. This column discusses key institutional elements in the design of the current social insurance scheme that have contributed to the growing gap in coverage, particularly the scheme’s cost and eligibility requirements.

Making trade agreements more environmentally friendly in the MENA region

Trade policy can play a significant role in efforts to decarbonise the global economy. But as this column explains, there need to be more environmental provisions in trade agreements in which developing countries participate – and stronger legal enforcement of those provisions at the international level. The MENA region would benefit substantially from such changes.

Jordan: navigating through multiple crises

Jordan’s real GDP per capita is today no higher than it was 40 years ago. While external factors have undoubtedly had an adverse effect on the country’s economic outcomes, weak macroeconomic management and low public spending on investment and the social sectors have also played a substantial role. This column explores what can be done to reduce high public debt, accelerate private sector development and enhance social outcomes.

Egypt and Iraq: amenities, environmental quality and taste for revolution

The Middle East and North Africa is a region marked by significant political turbulence. This column explores a novel dimension of these upheavals: the relationship between people’s satisfaction with, on one hand, the amenities to which they have access and the environmental quality they experience, and, on the other hand, their inclination towards revolutionary actions. The data come from the World Value Survey collected in 2018 in Egypt and Iraq.

Iran’s globalisation and Saudi Arabia’s defence budget

How might Saudi Arabia react to Iran's renewed participation in global trade and investment? This column explores whether the expanding economic globalisation of Iran, following the lifting of nuclear sanctions, could yield a peace dividend for Saudi Arabia, consequently dampening the Middle East arms competition. These issues have attracted increased attention in recent times, notably after a pivotal agreement between the two countries in March 2023, marking the resumption of their political ties after a seven-year conflict.