Egypt, Arab Republic of
From time to time, countries experience rapid economic growth without a significant decline in poverty. India’s GDP growth rate accelerated in the 1990s and 2000s, but poverty continued to fall at the same pace as before, about one percentage point a year. Despite 6-7 percent GDP growth, Tanzania and Zambia saw only a mild decline in the poverty rate. In the first decade of the 21st century, Egypt’s GDP grew at 5-7 percent a year, but the proportion of people living on $5 a day—and therefore vulnerable to falling into poverty—stagnated at 85 percent.
In light of this evidence, the World Bank has set as its goals the elimination of extreme poverty and promotion of shared prosperity. While the focus on poverty and distribution as targets is appropriate, the public actions required to achieve these goals are not very different from those required to achieve rapid economic growth. This is not trickle-down economics. Nor does it negate the need for redistributive transfers. Rather, it is due to the fact that economic growth is typically constrained by policies and institutions that have been captured by the non-poor (sometimes called the rich), who have greater political power. Public actions that relax these constraints, therefore, will both accelerate growth and transfer rents from the rich to the poor.
Some examples illustrate the point.
When I told friends and colleagues that my new job would be based in Cairo, almost everyone mentioned the awful congestion in the city, and how I would be wasting a tremendous amount of time being stuck in traffic. And how right they were: When it comes to traffic, Cairo is one of the most congested cities in the world. Of course, the city’s residents already know congestion is one of the city’s biggest problems. What they probably don’t know is exactly how much it’s costing them.
Education and employment are key problems for young people in Egypt, who say they need to see changes—in terms of more jobs and better education—in the present, not in the distant “future”, the word they always hear used in promises of change in Egypt.
Small and medium-size enterprises (SMEs) are becoming more of a priority for policymakers in the Middle East and North Africa (MENA). Seen as the driving force of many MENA economies, they help stimulate economic growth and encourage innovation and competition. They also play a huge role in creating more jobs in countries where these are urgently needed.
New entrants to the working age population in most Middle East and North Africa countries encounter economic structures and policies that have long failed to generate an adequate number of new jobs. In recent years, about 5 million people per year have reached working age but only 3 million of them have found jobs. Unfortunately, ongoing political turmoil and associated economic conditions and policies suggest that the jobs challenge will continue to fester for years to come. However, help may be on the way from a “curiously unnoticed” source: falling fertility rates.
The New ICP Data and the Global Economic Landscape
The new report of the International Comparison Program published last week promises to invigorate debate about the global economic landscape. In some areas, the report challenges conventional wisdom. In other areas, it reinforces the narrative.
The headline change according to The Economist is the rise of China to potentially become the largest economy in the world by the end of 2014. According to Angus Maddison, the United States’ economy became the largest in the world in 1872, and has remained the largest ever since. The new estimates suggest that China’s economy was less than 14% smaller than that of the US in 2011. Given that the Chinese economy is growing more than 5 percentage points faster than the US (7 percent versus 2 percent), it should overtake the US this year. This is considerably earlier than what most analysts had forecast. It will mark the first time in history that the largest economy in the world ranks so poorly in per capita terms. (China stands at a mere 99th place on this ranking.)
It’s the first class of an adult literacy program for young Moroccan women. Ghita comes to the front of the class, picks up a piece of chalk and carefully draws a line on the blackboard. It is the letter alif, the first letter of the Arabic alphabet, one of the simplest to recognize and write: a single downward stroke.
Following Russia’s annexation of Crimea after the popular voting in early March, the European Union and recently the U.S. and Canada have imposed their first round of sanctions—an asset freeze and travel ban on some officials in Russia and Crimea. This week NATO's foreign ministers, warning that Russian troops could invade the eastern part of Ukraine swiftly, ordered an end to civilian and military cooperation with Russia. Should the crisis escalate, potential fallout on Middle East and North Africa (MENA) countries is likely. The effects would be transmitted directly through trade and indirectly through commodity prices.
At the heart of the upheavals that swept across the Middle East region during the Arab Spring was the call for more transparent, fair and accountable government. In the aftermath of the uprisings, specialists are left to address the issue of transition to democratic rule. In doing so, they have to answer the following questions: how can we systemize the culture of accountability and democratic governance? How can we channel the popular energy of street mobilization into a powerful institution that keeps duty-bearers in check?
- social accountability
- Social Development
- Middle East and North Africa
- Yemen, Republic of
- West Bank and Gaza
- United Arab Emirates
- Syrian Arab Republic
- Saudi Arabia
- Iran, Islamic Republic of
- Egypt, Arab Republic of