Economic Research Forum (ERF)

October

Energy subsidy reform: progress and challenges

Despite a growing global consensus about the need for reform of costly and environmentally damaging energy price subsidies, many countries remain resistant. This column takes stock of recent developments in the context of a database of diesel prices. Environmental concerns seem to play a role in driving reform, but most reforming countries have been facing large fiscal imbalances.

Creating jobs: East Asian success and MENA failure

Comparing the experiences of MENA and East Asia in recent decades reveals the delicate nature of the latter’s remarkable structural transformation: several parts of the economy had to be pulling in the same direction. This column explains how East Asia succeeded – and MENA failed – in generating productive employment.

Inequality in higher education: Egypt, Jordan and Tunisia

Attainment of higher education is strikingly unequal in Egypt and Tunisia, and a little less so in Jordan. This column reports research showing that in all three countries, family background is the primary driver of inequality. Particularly in Egypt and Tunisia, public spending on higher education is regressive, with the result that what purports to be a meritocratic and equitable system in reality perpetuates inequality.

Going beyond Doing Business to foster job creation

The World Bank’s Doing Business rankings provide a useful benchmark, but making them a key policy goal is inappropriate for Arab countries where the reform agenda needs to be far more wide-ranging. This column argues for a more practical and effective approach to creating business environments that will attract investment and foster job creation.

From booming oil revenues to inclusive growth

The first ten years of the twenty-first century saw an unprecedented surge in oil prices and highly favourable incomes for oil-exporting countries in the Middle East – yet it culminated in social and political upheaval. This column reports research on the extent to which the growth experiences of those countries in that decade may be considered to have been ‘inclusive’ of a broad swathe of society.

Inequality underestimated in Egypt: evidence from house prices

Standard estimates of income and consumption inequality rank Egypt as one of the world’s most equal countries. By analysing data on house prices to obtain a more accurate estimate of the top tail of the income distribution, this column presents evidence that Egyptian inequality is considerably underestimated.

Public procurement: the value of making global commitments

The World Trade Organization’s Agreement on Government Procurement aims to ensure that public procurements in signatory countries are conducted in a competitive, non-discriminatory and transparent manner satisfying the conditions of integrity. This column reports research showing that the agreement promotes competition, reduces corruption and delivers better value for taxpayers’ money.

Lessons and pitfalls of transitions to democracy

Under what circumstances is a country most likely to make a successful transition to democracy? This column outlines the roles of both human agency and structural factors such as class or economic interests. Key to the process of democratisation is the kind of incentives that encourage elite groups in society to reach compromises even in the face of ideological differences.

Mothers’ education and children’s health

Educational reforms in Turkey 20 years ago led to a significant improvement in the attainment of young men and women. This column reports research indicating that the children of women who were required to extend their time at school from five to eight years are healthier at birth and less likely to die by the age of five.

Job creation and labour market regulation: flexibility versus security

Job creation in the formal private sector is vital for inclusive economic growth in many MENA countries, but in some cases, it is being hampered by over-protective labour regulations. This column emphasises the importance of a balanced approach between flexibility in the labour market and the security of workers’ earnings.

Diversification strategies for the Gulf monarchies

For the Gulf monarchies, the only long-term solution to lower oil prices is to diversify the economy, which can be done either with or without citizen labour. This column argues that given employers’ preference for foreign labour, the only alternative is to bifurcate the job market, creating enclaves where citizen labour can be used productively. This requires strong state institutions that can impose labour market regulations on businesses.

What’s holding back the private sector in MENA?

The development of a vibrant private sector is essential for delivering the sustainable employment and inclusive growth that are so urgently needed in the countries of the Middle East and North Africa. This column summarises findings on the key constraints on doing business from Enterprise Surveys conducted in eight economies in the region during the period 2013-15.

The oil price collapse: crisis or opportunity?

How should oil-producing economies in the Middle East and North Africa respond to the potential persistence of low oil prices? This column argues that governments need both to find alternative revenue sources and to make the non-oil economy more productive. It is time to think about the next chapter in the region’s development history – the post-oil chapter.

Putting human security at the heart of public policy-making

Governments’ core objective of providing a secure environment for their people is traditionally understood to mean ‘national security’. This column advocates replacing that idea with a broader concept of ‘human security’. Such an approach can provide a consistent framework for handling multiple challenges, including natural disasters and global crises as well as military threats.

Universal primary care lowers mortality: evidence from Turkey

In 2005, Turkey extended basic healthcare services to its entire population under a free-of-charge, centrally administered system. This column reports research showing that the programme was successful in lowering mortality rates across provinces, particularly for the most vulnerable. The findings provide compelling evidence in support of providing accessible healthcare services to all citizens.

Freedom for women is crucial for economic progress in MENA

The Middle East was once the cradle of civilisation: can it prosper once again? Looking back at lessons from the European Enlightenment, this column argues that if the region wants to advance economically, it needs to advance in terms of its treatment of women. Female agency is central to understanding the West’s technological leadership of the past two centuries.

Implications of the current low oil prices for MENA countries

The current low oil price environment, in part driven by the US shale oil revolution, has important macroeconomic implications for the Middle East and North Africa (MENA). This column reports research evidence on its likely impact on both oil-exporting and oil-importing countries in the region.

Transition lessons from China for MENA development

How can developing economies escape from the trap of middle- or low-income status in which the majority has been for decades? Drawing lessons from the experiences of China, this column argues that an economically successful country must have the market as its foundation and on top of that the state playing an active, facilitating role.

Why the West got rich and the Middle East did not

Today’s rulers of the three largest Middle Eastern economies all look to religious authorities as a key source of legitimacy. Drawing on a broad sweep of historical analysis, this column explores what this might mean for the region’s economic future. One notable danger is that the types of people who would push for policies that promote long-run growth are excluded from the political bargaining table.

Oil exporters’ responses to the US fracking boom

What are the implications of low oil prices for the economic and political stability of Arab oil-exporting countries such as Saudi Arabia? This column explores the impact of the US fracking boom on Arab oil revenues – and how policy-makers in these countries should respond.

The United Arab Emirates’ dilemma

As energy-producing economies strive to reduce their reliance on oil revenues, they must strike a balance between the competing demands of fiscal sustainability and steady growth of the non-energy sector. This column outlines how the United Arab Emirates is addressing this challenge.

An agenda for reducing income inequality in the Arab countries

What can be done to reduce income inequality in Arab countries? This column explores issues of measurement as well as potential policy measures. It concludes by calling for a new multipurpose pan-Arab survey that would allow for an evidence-based decision-making process on the impact of proposed policies on poverty and inequality.

Prospects for development with democracy in the Arab world

What are the prospects for democracy in the Arab world? This column expresses the hope that as conflict-afflicted countries embark on their programmes of economic reconstruction, autocratic institutions will not be re-established under the pretext of the need for a speedy and steady recovery. The optimal path of development necessarily includes robust growth, equity as well as democracy.

Why Turkish growth ended

Following a period of rapid economic growth, the Turkish economy has slowed significantly since 2007. This column argues that these economic ups and downs reflect institutional improvements in the aftermath of the country’s 2001 financial crisis, followed by an ominous slide in the quality of these economic and political institutions.

It’s time to stop the civil war in Syria

Since 2011, the conflict in Syria has created more refugees and more internally displaced persons than anywhere else in the world. This column suggests that the international community can no longer afford simply to accept the growing costs of civil wars like Syria’s and should intervene to end them and promote reconstruction.

Most read

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.

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.

Labour market effects of robots: evidence from Turkey

Evidence from developed countries on the impact of automation on labour markets suggests that there can be negative effects on manufacturing jobs, but also mechanisms for workers to move into the services sector. But this narrative may not apply in developing economies. This column reports new evidence from Turkey on the effects of robots on labour displacement and job reallocation.

Global value chains and domestic innovation: evidence from MENA firms

Global interlinkages play a significant role in enhancing innovation by firms in developing countries. In particular, as this column explains, participation in global value chains fosters a variety of innovation activities. Since some countries in the Middle East and North Africa display a downward trend on measures of global innovation, facilitating the GVC participation of firms in the region is a prospective channel for stimulating underperforming innovation.

Food insecurity in Tunisia during and after the Covid-19 pandemic

Labour market instability, rising unemployment rates and soaring food prices due to Covid-19 are among the reasons for severe food insecurity across the world. This grim picture is evident in Tunisia, where the government continues to provide financial and food aid to vulnerable households after the pandemic. But as this column explains, the inadequacy of some public policies is another important factors causing food insecurity.

Sustaining entrepreneurship: lessons from Iran

Does entrepreneurial activity naturally return to long-term average levels after big economic disturbances? This column presents new evidence from Iran on trends in entrepreneurship among various categories of firm size, sector and location – and suggests policies that could be effective in promoting entrepreneurial activities.

Manufacturing firms in Egypt: trade participation and outcomes for workers

International trade can play a large and positive role in boosting economic growth, reducing poverty and making progress towards gender equality. These effects result in part from the extent to which trade is associated with favourable labour market outcomes. This column presents evidence of the effects of Egyptian manufacturing firms’ participation in exporting and importing on their workers’ productivity and average wages, and on women’s employment share.

Intimate partner violence: the impact on women’s empowerment in Egypt

Although intimate partner violence is a well-documented and widely recognised problem, empirical research on its prevalence and impact is scarce in developing countries, including those in the Middle East and North Africa. This column reports evidence from a study of intra-household disparities in Egypt, taking account of attitudes toward gender roles, women’s ownership of assets, and the domestic violence that wives may experience from their husbands.

Do capital inflows cause industrialisation or de-industrialisation?

There is a clear appeal for emerging and developing economies, including those in MENA, to finance investment in manufacturing industry at home with capital inflows from overseas. But as the evidence reported in this column indicates, this is a potentially risky strategy: rather than promoting industrialisation, capital flows can actually lead to lower manufacturing value added and/or a reallocation of resources towards industries with lower technology intensity.

Financial constraints on small firms’ growth: pandemic lessons from Iran

How does access to finance affect the growth of small businesses? This column presents new evidence from Iran before and during the Covid-19 pandemic – and lessons learned by micro, small and medium-sized enterprises.