Hafez Ghanem (World Bank and ERF) ERF- Towards a New Development Agenda for the Middle East

1. The Arab Spring
Five Years Later
Hafez Ghanem
World Bank Vice President for MENA
Research Fellow, ERF
Nonresident Senior Fellow the Brookings Institution

2. What caused
“the Arab Spring” ?

3. Average GDP Growth Rate for Arab Countries
in Transition, 1991-2010
Country 1991-94 1995-99 2000-04 2005-10
Egypt 2.4 5.8 3.9 5.9
Jordan 6.4 3.6 5.6 6.6
Morocco 3.1 2.3 4.7 4.6
Tunisia 4.6 5.2 4.5 4.4
Yemen 6.3 5.1 4.3 4.6
Source: Data from International Monetary Fund, World Economic Outlook, Author’s Calculation

4. Dissatisfaction and Unhappiness among
Surveyed Arab Countries in Transition
0
5
10
15
20
25
30
35
40
45
50
Egypt Iraq Jordan Morocco Brazil India Indonesia Malaysia
Dissatisfied
Not happy
Source: Data from World Value Survey (2005-09) Egypt 2009, Iraq 2006, Jordan 2007 Morocco 2007. Brazil 2006, India2006, Indonesia 2006,
Malaysia 2006

5. GDP Growth and People’s Satisfaction
• Despite increase in GDP per capita, Egyptians felt worse off.
Gallup Inc., “Arithmetic of Revolution” and IMF World Economic Outlook for data on GDP per capita
0
5
10
15
20
25
30
35
40
2006 2007 2008 2009 2010
Poorest 20% Richest 20% Egypt Total GDP per Capita
%
$ 5,508
$ 5,904
$ 6,114
$ 6,367
• Public Perceptions & GDP per Capita (PPP)
1

6. Tunisians’ Reasons for Revolting against
President Ben Ali
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Weak economy Corruption Lack of political
freedom
Want more
Islamization
Don't know
Source: Arab Barometer Survey, wave 3 (2012-2014)

7. Most Excluded Groups
•Youth
•Women
•Smallholder Farmers

8. Youth Unemployment Rate
Country Youth Male Female
Arab
Egypt 24.8 14.7 54.1
Tunisia 29.4 27.8 32.7
Algeria 21.5 18.7 37.6
Syria 20.4 16.4 43.5
Saudi Arabia 30.0 23.5 54.8
Bahrain 5.0 2.5 11.6
Qatar 1.2 0.5 7.0
Comparator
Indonesia 21.4 21.0 22.0
Malaysia 11.4 11.0 12.0
Brazil 17.8 13.8 23.1
Source: International Labor Organization(2010 and 2011)
%

9. Female Labor Force Participation Rate (%)

10. Female Labor Force Participation across
Country 2010

11. Aggregate Human Opportunity Index
Egypt by Region 2009
Category Metropolitan Lower Egypt Upper Egypt Borders
Education 76 78 70 77
Housing 89 77 68 75
Early
Childhood
77 69 65 55
Nutrition 77 77 75 65
Source: World Bank (2012)

12. High rates of rural poverty (headcount index,
percent)
National
poverty
Rural poverty Urban poverty
Egypt 25.2 32.5 15.3
Mauritania 42.0 59.4 20.9
Morocco 9.0 14.5 4.8
Tunisia 15.5 22.6 9.0
Source: World Development Indicators, World Bank

13. Four Priority Areas
•Institutional Reforms to improve
Implementation of Policies and Programs
•Reforms of the Business Environment, especially
for SMEs and Entrepreneurship
•Rural Development and Support to Lagging
Regions
•Improving the quality of Education

14. Summary of Planning Experience of East Asia,
Japan, Indonesia, and Malaysia
Country Summary of Planning Structure/Process
Japan Stakeholder inclusion through Economic
Council (“Shingikai).
Income-Doubling Plan as a guiding vision.
Indonesia Stakeholder inclusion through Development
Planning Committee
Malaysia Prime Minister’s Office as a strong
Implementation body.
Strong Monitoring System

15. Key Issues for Institutional Reform
•Inclusiveness & Accountability
•Introduce Inclusive Planning
•Enhance Implementation Capacity
•Monitoring and Evaluation
•Reform Economic Institutions

16. SMEs and job creation in the Arab world
Source : World Bank

17. Policy Constraints to Small Business
(% of Entrepreneurs Saying it is a Major Constraint)
All Entrepreneurs Young Entrepreneurs
Licensing & Registration 61.3 64.0
Labor Law 32.3 35.7
Labor Inspection 44.9 49.2
Tax Rates 68.6 66.7
Customs Duties 5.8 5.8
Tax Administration 65.0 63.0
Source: Ghanem (2013)

18. Reform of Business Environment for SMEs and
Entrepreneurship
Change Business Environment that favors few
connected Large Farms
• Tax Reform
• Simplify official permits and licenses
• Remove restrictions on international trade
• Fight Corruption
• Intervention beyond Credit Programs
• Reform of Education System

19. Primary School Net Enrollment Rate, 2002–11
20
30
40
50
60
70
80
90
100
PrimaryNetEnrollmentRatio
2001/2
2010/11

20. Arab Learning Barometer: Percentage Not
Meeting the Basic Learning Level
Country
Primary Secondary
Numeracy Literacy Numeracy Literacy
Bahrain 33 - 47 -
Jordan - - 45 48.1
Kuwait 70 - - -
Lebanon - - 27 -
Morocco 74 79 64 -
Oman 54 53 61 -
Palestine - - 48 -
Qatar 45 40 46 63.4
Saudi Arabia 45 35 53 -
Syria - - 57 -
Tunisia 65 - 39 50.1
United Arab
36 36 27 31.0Source: Steer, Ghanem and Jalbout (2014)

21. Education for Greater Inclusion
Quality of Education
• Curricula and Teaching Method
• Hold schools and teachers accountable for learning
outcomes

22. Relative importance of Agriculture (percent)
Rural
Population/Population
Employment in
Agriculture/Employment
Agriculture GDP/GDP
Algeria 27 12 8
Egypt 56 29 15
Mauritania 47 38 14
Morocco 43 40 15
Libya 22 3 2
Tunisia 34 16 9
Source: Arab Organization for Agricultural Development, Statistical Yearbook, 2012

23. Relative Importance of Holdings of less than 5
Hectares
Share in Total Holdings Share in Land Area
Algeria 55.4 11.3
Egypt 98.2 70.7
Morocco 69.8 23.9
Tunisia 53.5 10.9
Source: FAO, Agriculture Census Data

24. Average Size of Family Farms
1.8
0.7
2.1 2.2
Algeria Egypt Morocco Tunisia
Source: FAO Agriculture Census Data

25. Inclusive Agriculture and Rural Development
• Improve Access to Market, Reduce Role of
Intermediaries
• Improve Access to Financing and Investment
Resources
• Improve Access to Land
• Improve Research and Extension Services
• Special Program for Women and Youth Farmers
• Reform Producer Organizations and Cooperatives
• Adjust Climate Change

26. Role of the International Community
•Long Term Vision
•Inclusive Growth and Social Justice
•Peace and Stability in the MENA are
Global Public Goods