Can the Diaspora contribute to the creation of jobs in the Middle East and North Africa?

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Recent attention has shifted from analyzing the impact of skilled migration on sending country labor markets to a broader agenda that also considers the channels by which diasporas promotes trade, investment, innovation and technological acquisition. Several developed and developing countries are increasing their ties with their Diasporas to take advantage of these transfers beyond remittances. It will be important to assess what could be the potential of strengthening the linkages with their Diasporas for countries in the Middle East and North Africa. Can these countries tap into their Diasporas as a source and facilitator of innovation, research, technology transfer, trade, investment and skills development?

Nolland and Pack (2007) have analyzed whether Arab-communities in North America and Europe can play a similar role as countries in Asia (China, India, South Korea and Taiwan, China) in revitalizing the Middle East. The authors also indicated that “given the limited extent of manufacturing activity in the Middle East and the lack of equivalents to the Indian Institutes of Technology, it would make difficult to benefit from this option.”

The Overseas Private Investment Corporation (OPIC) just announced that it will provide support to small and medium enterprises to spur private sector investment in Egypt, Tunisia, Morocco, Iraq, Jordan, Lebanon, the Palestinian Territories and other countries in the region (see  here). The objective of this initiative is to channel $2 billion for private sector investment.  Under this initiative OPIC will look to partner with diaspora entrepreneurs from the Middle East and North Africa that would like to invest in projects.

The real challenge for firms in the Middle East and North Africa not only lies in finding out the basic parameters of new technologies (efficient scales, sources of know-how and equipment, skill needs, international market size and access) and in assessing the availability of the local capabilities and suppliers, but in engaging in intra-industry and global production networks.

Can the Middle East and North African countries take advantage of outsourcing activities? According to Nolland and Pack it will be difficult for Arab countries to compete with India, Philippines or China in terms of highly skilled labor with English language skills. North African and Arab firms will need to build a set of skills and interact with large retailers in order to compete in this fastest system. I think that the Diaspora can contribute by providing market opportunities, establishing collaboration between US, European companies and Middle East and Arab companies, providing mentoring opportunities, helping with strategic management and  supplying information about standards, technology and quality that will help firms to compete in the global market.
 

Authors

Sonia Plaza

Senior Economist, Trade and Competitiveness Global Practice, World Bank

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