News

Arab growth must come from private sector

26 de julho de 2016

São Paulo – The private sector is a key driver of economic growth across the Middle East and North Africa, but major hurdles must be addressed before it can develop to the fullest. So says a World Bank survey released this Monday (25) that covered 6,000-plus businesses in eight different countries.

The study was conducted by the European Bank for Reconstruction and Development (EBRD) in partnership with the European Investment Bank (EIB) and the World Bank Group (WBG). It asked “What’s holding back the private sector in MENA?” and its respondents are from Egypt, Djibouti, Jordan, Lebanon, Morocco, Tunisia, Yemen, the West Bank and Gaza.

The businesses surveyed said they were held back by political instability, corruption, unreliable electricity supply and inadequate access to finance. They also said that barriers to trade and scarcity of appropriately trained workers stifle innovation and growth.

“Strategies to support firms in enhancing their productivity, as well as the process of resource reallocation towards more productive firms, should be a high priority for public authorities in the region,” the report reads. It highlights four specific areas where policy responses are required: to improve the business environment, to improve access to finance, to achieve better education, employment and skills, and to promote trade, competition and innovation.

The report adds that policies should remove distortions preventing entry into the labor market for women and provide more focused and targeted education for the young, as well as provide incentives to increase training intensity in firms.

“Fostering employment and entrepreneurial opportunities, particularly for young men and women, is vital to raise living standards and promote social and political stability. A reorientation of the region’s education system towards learning skills that are rooted in vocational training and relevant for today's world of leapfrogging technology is essential for boosting entrepreneurship and jobs,” said World Bank chief economist and senior vice president Kaushik Basu.

In trade, competition, and innovation, the report notes that increased productivity by firms requires greater openness to international trade, which in turn would be supported by more effective customs and trade regulations — for both imports and exports. To the World Bank, greater competition could also be promoted by reducing restrictions on firm entry and exit, and on foreign investment.

*Translated by Gabriel Pomerancblum