Transcript 2003 World Bank MENA Development Reports Jobs, Growth and

2003 World Bank MENA Development Reports
Jobs, Growth and Governance in the
Middle East and North Africa
Mustapha K. Nabli
Chief Economist
Middle East and North Africa Region
The World Bank
Brussels, February 16, 2003
The 4 reports focus on areas of central concern
to policy makers, researchers and outside
observers:
•Unlocking the Employment Potential of the Middle East and North
Africa: Toward A New Social Contract
•Better Governance for Development in the Middle East and North Africa:
Enhancing Inclusiveness and Accountability
•Trade, Investment and Development in the Middle East and North Africa:
Engaging the World
•Gender and Development in the Middle East and North Africa:
Women in the Public Sphere
2
MENA’s Employment Challenge
• Creating 100 million new jobs by 2020 or doubling the current
level of employment.
• In the next two decades the labor force will expand by 80 million
new workers. The expansion of the labor force in the next two
decades is equal to the cumulative increase over the period 19502000.
• Currently, the labor force is increasing by 4.2 million workers per
year compared to 3.2 million in the 1990s and 2.1 in the 1980s.
• The current unemployment rate is around 15 percent affecting
close to 20 million workers.
3
From Demographic Transition to Rapid Labor Growth
• MENA’s slow demographic transition has resulted in the highest and
most persistent labor market pressures anywhere in the world in the past
half-century.
Labor Force Growth Rates by Region, 1970-2010
4
3.5
1970-1980
1980-1990
1990-2000
2000-2010
3
2.5
2
1.5
1
0.5
0
South Asia
East Asia
Latin America and
the Caribbean
MENA
Sub-Saharan
Africa
4
The Emergence of High Unemployment in the 1990s
• Employment growth in the 1990s fell short of labor force.
• Unemployment falls disproportionately on the youth.
• Unemployment rates tend to be higher for females.
International Comparison of Unemployment Rates
35
30
Percent
25
20
15
10
5
0
OECD
MENA:
GCC
South Asia
Latin
Europe and
America & Central Asia
the
Caribbean
East Asia
and the
Pacific
MENA:
Non-GCC
SubSaharan
Africa
5
Current Unemployment Rates in Arab Economies
High Unemployment Rates in MENA countries
5
2001
2001
2001
2002
1999
1996
2000
2003
10
1997
1999
15
2001
20
2002
25
1999
Unemployment (%)
30
2002
2001
35
0
ia
b
ra
pt
y
Eg
an
m
ar
at
ia
in
za
co
an
ria
s
a
i
a
c
r
d
e
U
r
w
m
n
o
G
O
Q
e
lg
u
ah
A
or
Jo
d
Ku
Y
T
A
i
B
M
an
ud
a
k
n
S
a
tB
s
Note: Data include most recent estimates available for each country; rates in GCC
e
W
countries are for nationals only.
AE
t
ai
on
n
ba
e
L
r
Sy
ia
en
Source: Compiled by World Bank staff from ILO and country sources.
6
Youth are especially affected:
First-time job seekers: 90% of unemployed in Egypt;
2/3 in Yemen and UAE; more than 50% in Jordan and Morocco
First-Tim e Job Seekers Am ong the Unem ployed
100
90
80
Percent
70
60
50
40
30
20
10
0
Morocco 2001 Jordan 2003
Yemen 1999
UAE
2000
Kuw ait 1995
Egypt 2000
Source: ILO 2003b; except for Kuw ait, Population Census 2001; For Jordan, HES, 2003.
7
Workers are increasingly educated …and facing
increasingly difficult job prospects
Distribution of unemployed by level of education
Percent of total
unemployed
Figure
4.4. Distribution of the Unemployed by Level of Education (percent)
80
None
Primary
Secondary
Tertiary
70
60
50
40
30
20
10
0
Bahrain
Oman
Jordan
Egypt
Morocco
Tunisia
Algeria
Djibouti
Sources: ILO2002; except for Bahrain, ILO2003a; for Egypt ELMS, 1998; for Morocco, LSMS 1999.
8
Unemployment rates for women are 30%
higher than for men
Unemployment Rates by Gender in Arab Countries (percent)
40
Female
Male
35
30
25
20
15
10
5
0
Algeria
West
Jordan Morocco Tunisia Bahrain Qatar
Yemen
Syria
Egypt Lebanon Saudi
UAE
Kuwait
2000 Bank and 2000
1999
1997
2001
2002
1999
2001
2000
1997
Arabia
1999
2003
Gaza
1999
2001
Source: For Algeria, Jordan, Syria, Egypt, West Bank and Gaza, Yemen, ILO 2003b; for Tunisia, INS 2001; for Bahrain, Qatar, Saudi Arabia , Kuwait and
UAE, Girgis, Hadad-Zervose, and Coulibaly 2003; for Morocco, LSMS 1999; for Yemen, NPPS 1999.
9
Worker Productivity Growth Was Also Low in the 1990s
• For the MENA region, productivity was the lowest among all other regions
except for Eastern Europe and Central Asia.
• As a result, real wages increased marginally in a few countries. In most, they
either stagnated or fell in the 1990s.
Average Annual Growth of GDP Per Employed Person by Region,
1990s
8
7
6
Percent
5
4
3
2
1
0
East Asia and
Pacific
South Asia
High income /
OECD
Europe and
Central Asia
Latin America
and the
Caribbean
MENA
10
Old modes of employment in the
public sector in MENA fast dwindling
Has depended upon
• Oil
• Aid
• Labor Remittances : diminished
opportunities to GCC and Europe
…and all financial resources declining
11
Per
oil exports,
1980-2000
Percapita
Capita
Oil Exports,
1980–2000
GCC and MENA
10000
MENA (right axis)
GCC (left axis)
Non-GCC (right axis)
300
250
8000
200
6000
150
4000
100
2000
50
0
Non-GCC
12000
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
12
Aid to GDP ratio in the MENA region, 1980-2000
1980
1985
1990
1995
2000
13
Worker remittances as % of GDP: Egypt and
Morocco, 1970-2000
16
Egypt
14
Morocco
10
8
6
4
2
20
00
19
97
19
94
19
91
19
88
19
85
19
82
19
79
19
76
19
73
0
19
70
Percent
12
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MENA Needs a New Development Model
to unlock its potential
•From public sector dominated to private-sector
driven,
•From closed and passive to more open and active,
•From oil dominated and volatile to more stable
and diversified.
…. the challenge of job creation requires a comprehensive
approach to reform.
15
The private sector in MENA remains underdeveloped
Private Sector Contribution to GDP in MENA (percent)
2000
2000
1990
2001
50
1990
1995
1997
2000
60
1983
1985
1999
2002
1999
1999
1990
70
1985
1993
80
1997
2002
1995
90
2000
100
40
1980
30
20
10
0
Lebanon
Egypt
Morocco
Jordan
Iran
Palestine
Syria
Tunisia
Yemen
UAE
Algeria
Saudi
Arabia
16
Exports outside of oil have been limited…
Trade Potential of Non Oil Exports, 2000
F i g u re 1 . 1 5 T ra d e P o te n ti a l o f n o n -o i l e x p o rts, 2 0 0 0
$US Million
250
M illio n U S D ollar s
200 2 0 0
1501 5 0
1001 0 0
50 5 0
0
0
M E NA 10
MENA 10
E CA 5
Europe and
Central Asia 5
E A S IA 3
East Asia 3
LA C4
Latin America
Caribbean 4
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Arab Non-Oil Export Potential
Non-oil exports remain largely
below potential
3.50
3.00
High performing countries
2.50
2.00
1.50
1.00
Weak performing countries
0.50
Note: Regression is based on 42 countries, but values for 8 low income countries, including Yemen, are not reported because of negative values. Arab9 =
Algeria, Egypt, Jordan, Lebanon, Morocco, the Republic of Yemen, Saudi Arabia, Syria, and Tunisia.
18
Malaysia
Philippines
Thailand
Hungary
Mexico
Korea, Rep.
Costa Rica
Czech Republic
Slovak Republic
Ecuador
Jamaica
Chile
Bolivia
Mauritius
El Salvador
Bulgaria
Poland
Guatemala
Turkey
South Africa
Russian Federation
Brazil
Argentina
Colombia
Iran, Islamic Rep.
Morocco
Jordan
Saudi Arabia
Tunisia
Arab9
Syrian Arab Republic
Lebanon
Egypt, Arab Rep.
Algeria
0.00
Oil has dominated development…
……affecting growth but not producing jobs
Figure 1.2 Real oil prices and growth, 1976–99
Real oil prices (left) and GDP growth (right)
14
40.0
12
10
30.0
8
6
20.0
4
GDP Growth (percent)
16
2
10.0
0
1996
1991
1986
-2
1981
0.0
1976
Real oil price (dollars per barrel)
50.0
19
Real oil Price
GDP grow th
These Economic Transitions Require
Three
Fundamental Transformations
•Reducing governance gaps in inclusiveness and
accountability
•Promoting greater participation of women in
economic activity, in order to utilize all their
potential/talent
•Improving the quality of educational outputs which
meet the needs of the new economy
20
Indicators of governance are well
under potential in MENA
Figure 6.9. Governance and Per-Capita Incom e in MENA
2
Index of Governance Quality
MENA
Rest of the World
1
MENA Trend
Rest of the World Trend
0
-1
Average MENA gap in quality
of governance
-2
6
8
Log of Per Capita GDP
10
Source: Per capita GDP, WDI 2002; governance quality, World Bank 2003a.
21
Better Governance Can Not Wait
•A vigorous state role in improving public administration is essential to
establishing the conditions that will permit economies to grow.
•Governance reforms are needed to enhance the investment climate required
for the emergence of a vibrant private sector.
•Governments need the institutional and regulatory instruments to manage
the difficult process of transition under conditions of vulnerability.
• Governance reforms are essential to permit governments to credibly
articulate and realize a new vision of state–society relations.
22
Participation of women in
economic activity is also well
below potential
2
MENA 1980
1.8
MENA 2000
Non-MENA 1980
Non-MENA 2000
1.6
1.2
1
0.8
0.6
0.4
AFR4
China
EAP4
ECA2
Turkey
India
LAC4
Iraq
Jordan
Bahrain
Iran
Syria
Algeria
Egypt
Tunisia
Kuwait
0
MENA
0.2
Morocco
Actual / Predicted
1.4
23
Understanding the Obstacles of the Past Is Critical
•Soft budget constraints: External revenues cushioned the
impact of economic stagnation and permitted governments to
adopt limited reforms while postponing difficult decisions.
•Political challenge from radical movements meant that
economic and political reforms were de-linked as governments
responded by reviving political control and national security
concerns.
•As a result, top-down management of Reform by Decree
replaced earlier efforts to generate support for economic reform
by opening the political arena.
24
Moving the Reform Process Forward requires
From the countries of the region
• a change from the selective, top-down approach to economic reform that
sidesteps the need for political change to secure the legitimacy of reform and
government credibility, which is no longer adequate.
•Governments will need to revive national conversations about the
restructuring of redistributive programs and a redefining of the terms of the
social contract.
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……. And from external partners
• Rethinking the response to persistent conflict in the region.
Multilateral efforts are needed to resolve the Israeli–Palestinian
conflict and return Iraq to a state of normalcy.
• Determined and programmatic efforts to support the wide-ranging
reform agenda, going beyond the transaction specific support
• To support deeper integration of MENA into the world economy,
encouraging more trade and investment, and lifting economic
sanctions.
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