Transcript Slide 1

URESG Seminar: What Constitutes a Regional Economy,
Open University in Wales 25 – 26 September 2013
A briefing on regional economies
in post-conflict Iraq
Amer K Hirmis
[email protected]
Tel. + 44 (0) 7918 913 897
Wednesday September 25 2013
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Structure and Sources
Structure:
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Iraq in the global context
Key economic features of Iraq
Key socio-economic characteristics of Iraq’s regions
Key challenges and opportunities for Iraq’s regions, going forward
Summary
Key sources:
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NDP 2010-2014;
Outline Spatial Strategy for Iraq, 2011;
NDP 2013-2017;
Various other, e.g. USAID, 2012, ‘Assessment of Current and Anticipated Economic Priorities in Iraq’ (a
report for the PM’s Advisory Commission)
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International perspective, 2007
Country
Indonesia
Algeria
Iraq
Venezuela
Mexico
Malaysia
Saudi Arabia
Norway
Iraq *
GDP
per capita
Oil exports
per capita
($)
($)
Non-oil
exports
as %
of total
1919
4037
4179
8416
12580
13570
15478
53320
1935
70
1321
922
1874
368
829
8501
17508
1285
86
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26
85
86
10
32
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* Saudi Arabia's oil reserves ~ 225 bn. Barrels, Iran's ~ 138 bib. and Iraq's ~ 120 b.b.
Sources: OPEC, UNCTAD, WB and, Norway: Oil & gas exports
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Iraq within MENA, 2010
Growth rate
6.2% in 2006
0.8 % in 2010
12% in 2012
US$ 64.1 bn
US$ 144.8 bn
Oil exports = 45-50% of GDP
Oil revenue = 95% of Gov. Budget
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Rate of investment in Iraq, 1949-2010
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Investment (GFCF) in Iraq, 1988 prices
2010, 96.3%
NDP, 2013-17, p. 5
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Unemployment, 2011
Underemployment was at 61.4 %
Male and female unemployment
within the 15-29 age-group, was
15.5% and 33.3% respectively
Amongst those with ‘A’ Level
equivalent education, unemployment
was 12.7%, those with ‘GCSE’
equivalent, it was 24.2%
(source: NDP 2013-2017, p. 36)
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‘The paradox of the plenty’
Slum in Iraq, Baghdad, 2007
250 slums in Iraq, the largest in Baghdad, where
1.5-2.0 (some say 3.0) million people live.
If it were not for 23 years of wars, “Iraq's GDP could have been more than 50 times
its projected GDP in 2010. In other words, (the dividend of peace might have been
that) every Iraqi citizen would be earning over US $9,600 instead of the US$2,300”
(see: 'Cost of Conflict in the Middle East' by Strategic Foresight Group, January 2009, and
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www.economywatch.com ).
US Depression and, and poverty in Iraq?
Source: GT School of City and Regional Planning &
Georgia Planning Association [1920s]
Source:
http://www.google.co.uk/?gws_rd=cr&ei=Vak1UvqTMuOg4gTWtoF4#q=images+of+al+mutanab
bi+street+in+Baghdad [2008]
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A café, and, another café?
Al-Shabander Café - a
Baghdadi institution
Café Central - a Viennese institution
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GDP at 1988 prices, 1970-2030 (ID mil)
Trend rate of
growth = 5.9% p.a.
200000.0
180000.0
160000.0
140000.0
120000.0
100000.0
80000.0
60000.0
40000.0
20000.0
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
2018
2021
2024
2027
2030
0.0
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•1970-79 Oil boom
• 1979-89 Iraq-Iran War
• 1991 Gulf War 1
• 2003 Gulf War 2
• 2005 reconstruction
• Risky to assume that long
term growth will be sustained.
GDP will continue to be oil
price-sensitive for the
foreseeable future.
•Iraq’s GDP is 1/6 that of
London; per capita GDP is
1/11 (2012 figures)
Population Projections in Iraq 2010-2030
2010 population = 32
million, projected to be 49
million in 2030, a 17
million increase.
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Employment projections in Iraq, 2010-2030
2010 employment = 8 million,
projected to be 18 million in 2030, a
10 million increase.
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NDP investment allocations of US$ 186 bn. over 2010-14
Of this, 25.5%
to Baghdad,
11.5%, to
Mosul and
8.8% to Basra
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The NDP and the OSSI
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Reducing uneven (dual) regional growth
Realising a more integrated, sustainable, regional growth
Minimising disparity in the provision of infrastructure and basic
amenities – health, education services, sports facilities, etc.
Containing urban sprawl and the growth of shanty towns
Addressing the problem of desertification …
Strengthening the transport network to link markets and also
promote inter-city mobility
Strengthening capacity for implementing investment
programmes …rising to challenges, realising opportunities
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Poverty, a key constraint to regional growth…
Poverty is defined as not being able to obtain the minimum basket of goods valued by the 2007 IHSES survey at $2 per day/person
% of population
Hypothesis: the higher the level of poverty, the higher the vulnerability of a
region to economic shocks and the less resilient it would be to those shocks.
The economic structure might mitigate the impact, depending on the nature
of the shock; cyclical, structural (sector-specific)...
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Regional employment forecasts, 2010-2030
Regional employment 2010-2030,
Baghdad, Nineveh, Basra, Babil and
Sulaimaniya dominate
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GDP by region at constant prices (ID mil.)
1995-2030 Base Case
45000.0000
40000.0000
35000.0000
30000.0000
25000.0000
20000.0000
15000.0000
10000.0000
5000.0000
0.0000
2007
2012
2017
2022
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2027
2032
Nineveh
Kirkuk
Diala
Al-Anbar
Baghdad
Babylon
Kerbela
Wasit
Salah AL-D
Al-Najaf
Al-Qadisi
Al-Muthan
Thi-Qar
Maysan
Basrah
Duhouk
Erbil
AL-Sulaim
Opportunities for regional economic growth
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Reducing the number of 12,000 rural settlements through the
provision of transport, and key social amenities (argument
based on economies of scale and commercial viability)
Provide improved necessary infrastructure - roads, airports,
harbours, electricity, water supply, sewage …
Establish much stronger synergy amongst housing, transport ,
social infrastructure and new jobs in designing urban policy
Commercially exploiting regional resources - regionally (growth
poles/clusters and ‘tax-free zones’ of economic activities?)
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Uncertainties about outcomes?
• There is no expected measure of compliance with strategic investment
objectives, and no clearly actual prescribed roles for public, private or
parastatal entities. (USAID, 2012, p. 3)
• Current GoI management of the economy often perpetuates state-centric
approaches to economic management. Crippling bureaucracy has maintained
the fragmentation of the national budget, undermining government policy
coordination
• Capability to undertake project ex ante appraisal / ex post evaluation, is very
weak (by MoP candid admission), and Iraq suffers from low rate of
implementation (60% at best), partly due to absorptive capacity constraints…
• Political decentralisation vs. regional economic growth
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Summary
• More than two decades of wars and economic sanctions have left Iraq and its
regions much worse off than it was prior to 1980
• Regional duality, inefficiency, ineffectiveness and inequality are deeply
entrenched, and may remain a characteristic of the regional economic scene in
Iraq for the foreseeable future
• Oil revenues provide a massive opportunity to create new jobs, provide basic
amenities, alleviate poverty and engender economic growth and associated
social changes. The diversification of the economy is critical
• There are serious barriers, with negative effects on inducing regional economic
growth, including the lukewarm participation of the private sector in long-term,
lack of security, crippling bureaucracy, corruption, all hindering the commercial
exploitation of vastly available non-oil natural resources in Iraq
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THANK YOU
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