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Corrosive Subsidies in MENA

Shanta Devarajan's picture

Air pollution in Cairo Half the world’s energy subsidies are in the Middle East and North Africa Region.  These subsidies have been criticized on grounds that they crowd out public spending on valuable items such as health, education and capital investment.  Egypt for instance spends seven times more on fuel subsidies than on health.  Furthermore, the allocation of these subsidies is heavily skewed towards the rich, who consume more fuel and energy than the poor.  In Yemen, the portion of fuel subsidies going to the richest quintile was 40 percent; the comparable figure in Jordan was 45 percent and in Egypt, 60 percent.
 

Is MENA’s Undernourishment Getting Worse?

Farrukh Iqbal's picture

Vendor and his vegetable stand One of the targets of the Millennium Development Goals for poverty and hunger is monitored in part through a measure called Prevalence of Undernourishment.  This is defined in the World Development Indicators (WDI) database as the proportion of the population whose food intake is insufficient to meet minimum dietary energy requirements continuously. 

 Comparative data (see figure below) show two, somewhat contradictory, aspects of undernourishment in the Middle East and North Africa (MENA) region.  During 1991-2012, the MENA region has had very low levels of undernourishment; among developing regions, it is tied for lowest average with Europe and Central Asia.  But the average level of undernourishment in the region appears to have worsened over time.  The latter is surprising because the MENA region is made up of middle and high income countries (with the exception of Djibouti and Yemen) and has not been subject to any prolonged negative food or income shocks in the past two decades.  Indeed, all other regions have experienced a steady decline in undernourishment since 1991.

Redistribution and Growth: The MENA Perspective

Elena Ianchovichina's picture

Recently three IMF economists published a paper arguing that redistribution is in general pro-growth (Ostry et al. 2014). The paper caused a stir as it dismisses right-wing beliefs that redistribution hurts growth. However, even people sympathetic to the ideas of inclusive growth and equality of opportunity find this finding problematic. One reason is that the authors rely on a measure of redistribution that misrepresents the true cost of redistribution in an economy. Another has to do with the omission of factors that affect positively the income growth of the poor and vulnerable, such as employment.  This omission would exaggerate the importance of equality through redistribution as a source of growth and underplay the importance of structural transformation and investments directed towards sectors that use unskilled labor more intensively, and therefore have the potential to generate inclusive growth and productive employment for the poor segments of the population.

Achieving Shared Prosperity in the Middle East and North Africa

Elena Ianchovichina's picture

In terms of the World Bank’s twin goals of eliminating extreme poverty and boosting shared prosperity, the Middle East and North Africa Region was making steady progress. The percentage of people living on less than $1.25 a day was 2.4% and declining.  And the incomes of the bottom 40% have been growing at higher rates than average incomes in almost all MENA countries for which we have information.

Yet, there were revolutions in several countries and widespread discontent. Why?

 

الحوار المفقود: كيف يمكن بناء رأسمالية أخلاقية في العالم العربي

Ishac Diwan's picture
Also available in: English

A young Egyptian holding a flag  تتصدى دول التحول العربي التي تضم تونس ومصر واليمن وليبيا حاليا لقضايا معقدة تتعلق بالقيم الفردية، ومدى حرية التعبير، والحقوق الشخصية، والأمور العائلية التي تدور جميعا حول القضايا الجوهرية المتمثلة في الهوية والأدوار التي يلعبها الفرد والدولة والمجتمع. وهذه الحوارات الاجتماعية بناءة من حيث إنها تعكس ثراء الرؤى وتعددها في مجتمعات كانت مسايرة الموجة هي السمة السائدة في كنف النظم الديكتاتورية. لكن للأسف، تؤدي هذه الحوارات إلى الاستقطاب في المجتمع بما يؤدي إلى العنف والتهديد بالفوضى واحتمال العودة إلى الاستبداد. في الحقيقة، يعكس الاستقطاب الاجتماعي الحالي إلى حد بعيد محاولات السياسيين استغلال الانقسامات الاجتماعية، بل وتأجيجها، بطريقة تذكي حماس أنصارهم المحتملين لملء الفراغ السياسي الذي نجم عن رحيل طغاة العصر. وتختلف حالات الحراك التي يشهدها المغرب والأردن والجزائر ولبنان بعض الشيء، إلا أنه في هذه الحالة أيضا يؤدي التركيز المكثف والاستثنائي على الهوية إلى تزاحم التحديات الاجتماعية والاقتصادية بطريقة أكثر أهمية وأكثر سرعة.
 

The Missing Conversation: How to Build a Moral Capitalism in the Arab Region

Ishac Diwan's picture
Also available in: العربية

A young Egyptian holding a flag The Arab transition countries, Tunisia, Egypt, Yemen, and Libya, are grappling with complex issues relating to personal values, the extent of freedom of speech, individual rights,  family matters, that all orbit around deep issues of identity and the respective roles of the individual, the state and society. These social conversations are constructive in that they reflect a rich pluralism of views in societies where conformity was the rule under dictatorship. But unfortunately, these dialogues are polarizing society, leading to violence and threatening chaos and a possible return to authoritarianism. In fact, the current social polarization to a large extent reflects attempts by political entrepreneurs to use existing social fault lines, and even exacerbate them, in ways that mobilize passions among possible supporters, driven to over-reach by the political vacuum created by the departure of the historical autocrats. The dynamics in Morocco, Jordan, Algeria, and Lebanon are slightly different, but here too, the intense and exclusive focus on identity is crowding out more important and immediate social and economic challenges.