Development Policy Review
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Publication
The Unfinished Revolution : Bringing Opportunity, Good Jobs and Greater Wealth to All Tunisians
(Washington, DC, 2014-05-24)Until 2010 Tunisia appeared to be doing well and was heralded by the World Bank and the IMF as a role model for other developing countries, and the World Economic Forum repeatedly ranked Tunisia as the most competitive economy in Africa. Yet, the Tunisian model had serious flaws. Inadequate creation of jobs, notably for university graduates, and deep regional disparities were a source of increasing frustration across the country in the run up to the January 2011 Revolution. This development policy review shows that, in contrast to the façade often presented by the former regime, Tunisia's economic environment was and remains deeply deficient. The review highlights an economy that has remained frozen in low-value added activities and where firms are stagnating in terms of productivity and jobs creation. The review argues that Tunisian prosperity has been held back by policies that have reduced the country s overall economic performance. This poor performance results from extensive barriers to entry and market restrictions coupled with a heavy business regulations and a poorly functioning financial system, have resulted in economic stagnation. Economic policies have exacerbated cronyism and rent-seeking, allowing under-performing firms to survive, regardless of their productivity. in order to fulfill its economic potential, Tunisia needs to create a level playing field by opening up the economy and removing Tunisia's three dualisms, namely the onshore-offshore division, the dichotomy between the coast and the interior, and the segmentation of the labor market. A strong social policy is also necessary, of course, and should be designed to accompany private sector-led growth. Tunisia can capitalize on a strong competitive advantage to export wage-intensive goods, expand its export of services, and unleash the potential of agriculture, to the benefit of small businesses, young graduates, and farmers in Tunisia's long-neglected interior regions. Realizing these benefits will require improving the investment climate, rationalizing regulations, and developing more equitable development policies that benefit all of Tunisia's regions. The Unfinished Revolution is a challenge for policymakers to rethink Tunisia's economic development model, to question existing assumptions, and to dare to think big about policy reforms which can accelerate growth and shared prosperity, create quality jobs and promote regional development. -
Publication
Jordan - Policies for High and Sustained Growth for Job Creation : Hashemite Kingdom of Jordan 2012 Development Policy Review (Vol. 1 of 2) : Synthesis
(Washington, DC, 2012-06)Jordan's quest for long-term, inclusive and sustainable growth has remained largely elusive. By the Growth and Development Commission's measure of success, namely, an average growth rate of 7 percent over 30 years, Jordan's growth record cannot be dubbed 'successful'. This Development Policy Review (DPR) shows that sustaining growth and reducing unemployment is possible: Jordan has a strong human capital base, a large endowment in engineers, doctors, accountants, Information Technology (IT) specialists and a substantial highly-skilled diaspora (500,000 educated Jordanians abroad, 8 percent of the population). Furthermore, the market-oriented reforms of the early 2000s have made Jordan one of the most open economies in the Middle East and North Africa Region and have led to the emergence of dynamic non-traditional sectors (e.g., information and communication technologies, health tourism and business services). What is missing are: (i) an adequate and stable institutional framework for policymaking and long-term business development; (ii) good fiscal policies to manage shocks and maintain macroeconomic stability; good institutions and macroeconomic stability were identified by the growth commission as two of the five common characteristics of successful growth experiences; and (iii) further growth-enhancing structural reforms. -
Publication
Hashemite Kingdom of Jordan - Development Policy Review : Improving Institutions, Fiscal Policies and Structural Reforms for Greater Growth Resilience and Sustained Job Creation (Vol. 1 of 2)
(Washington, DC, 2012-06)Jordan's quest for long-term, inclusive and sustainable growth has remained largely elusive. By the Growth and Development Commission's measure of success, namely, an average growth rate of 7 percent over 30 years, Jordan's growth record cannot be dubbed 'successful'. This Development Policy Review (DPR) shows that sustaining growth and reducing unemployment is possible: Jordan has a strong human capital base, a large endowment in engineers, doctors, accountants, Information Technology (IT) specialists and a substantial highly-skilled diaspora (500,000 educated Jordanians abroad, 8 percent of the population). Furthermore, the market-oriented reforms of the early 2000s have made Jordan one of the most open economies in the Middle East and North Africa Region and have led to the emergence of dynamic non-traditional sectors (e.g., information and communication technologies, health tourism and business services). What is missing are: (i) an adequate and stable institutional framework for policymaking and long-term business development; (ii) good fiscal policies to manage shocks and maintain macroeconomic stability; good institutions and macroeconomic stability were identified by the growth commission as two of the five common characteristics of successful growth experiences; and (iii) further growth-enhancing structural reforms. -
Publication
Hashemite Kingdom of Jordan - Development Policy Review : Improving Institutions, Fiscal Policies and Structural Reforms for Greater Growth Resilience and Sustained Job Creation (Vol. 2 of 2)
(Washington, DC, 2012-06)Jordan's quest for long-term, inclusive and sustainable growth has remained largely elusive. By the Growth and Development Commission's measure of success, namely, an average growth rate of 7 percent over 30 years, Jordan's growth record cannot be dubbed 'successful'. This Development Policy Review (DPR) shows that sustaining growth and reducing unemployment is possible: Jordan has a strong human capital base, a large endowment in engineers, doctors, accountants, Information Technology (IT) specialists and a substantial highly-skilled diaspora (500,000 educated Jordanians abroad, 8 percent of the population). Furthermore, the market-oriented reforms of the early 2000s have made Jordan one of the most open economies in the Middle East and North Africa Region and have led to the emergence of dynamic non-traditional sectors (e.g., information and communication technologies, health tourism and business services). What is missing are: (i) an adequate and stable institutional framework for policymaking and long-term business development; (ii) good fiscal policies to manage shocks and maintain macroeconomic stability; good institutions and macroeconomic stability were identified by the growth commission as two of the five common characteristics of successful growth experiences; and (iii) further growth-enhancing structural reforms. -
Publication
Tunisia - Development Policy Review : Towards Innovation-driven Growth
(World Bank, 2010-01-01)Tunisia must move from a low value-added and low cost economy to a higher value-added, knowledge intensive economy in order to significantly reduce unemployment, its overriding challenge. This Development Policy Review (DPR) provides a discussion of the key issues and challenges that are involved in achieving this goal. Towards this end, it discusses trade integration, innovation policies and enabling environment reforms (macro stability, economic regulation and governance, financial sector and labor market reforms and capital account opening) that could facilitate the structural transformation of the economy. The DPR is organized as follows: chapter one reviews growth and employment outcomes and challenges; chapter two discusses the rationale for increasing the pace of structural transformation of the economy in order to boost growth and reduce unemployment; chapter three examines the strengths and weaknesses of Tunisia's innovation system and strategies and proposes reform options in light of the international experience; chapter four discusses key aspects of Tunisia's global integration that could further contribute to innovation and productivity growth; chapters five discusses the key improvement in the enabling environment needed to support innovation and productivity growth (economic regulation, education sector reforms, financial sector reforms and labor market); finally, chapter six discusses structural transformation issues in natural resource-intensive sectors and examine the specific sectoral reforms needed to address the trade-offs between several objectives, including growth and natural resources preservation. -
Publication
Egypt - Development Policy Review
(Washington, DC, 2008-05)This development policy review finds ample evidence that Egypt has prospered as a consequence of giving the economy a greater market orientation. While favorable global conditions have helped, the structural changes over the last two decades have been an essential ingredient for Egypt's success. Productivity has risen more in segments of the economy where the private sector s share in investment and output grew most. Empirical estimates done for this report suggest that each dollar of private investment contributed four times more to output than a dollar of public investment, reflecting in part the poor choice and maintenance of public investment. Consequently, further increases in output, incomes and productivity may be expected from the recently rising share of private investment in the total. Public sector productivity has also increased in recent years, reflecting in part the increased importance of state owned firms in petroleum and natural gas. Egypt's economic growth is also now more closely correlated with that of the Organization for Economic Co-operation and Development countries magnified by a factor of 1.25, and volatility has declined. This results from many links, not just the direct effect of oil and gas. -
Publication
Yemen - Development Policy Review
(Washington, DC, 2008-04)Yemen is the second poorest country in the Middle East and North Africa region, with 42 percent of its population counted as poor in 1998. GDP has stagnated at around US$530 per capita in real terms since 2002. Unemployment, estimated at 11.5 percent in 1999, is expected to have worsened as the population has climbed at 3 percent a year and the labor force has burgeoned. Extreme gender inequalities persist. Malnutrition is so severe that Yemeni children suffer the world's second worst stunting in growth. And natural resources are increasingly constrained. Two-thirds of Yemen's known oil reserves were depleted by 2003, and production has already begun to decline and will plummet by 2012 if no new reserves are discovered. Freshwater is also increasingly scarce: per capita availability in Yemen is about 2 percent of the world average and projected to diminish by a third in the next 20 years because of the expected increase in population. Compounding these economic, social, and resource problems are Yemen's policy and institutional failings, which have prompted donors to cut aid. Yemen received a meager US$13 in development assistance per capita in 2004. In 2005, the Development Assistance Committee cut International Development Association (IDA) 14 (2006-08) allocations to Yemen by nearly a third, and the U.S. government's Millennium Challenge Corporation suspended Yemen's eligibility for assistance because of its worsening corruption, regulatory quality, and fiscal policies. The main challenges to Yemen's growth are the impending rapid decline in oil revenues, the weak capacity of governance institutions, the pressures of high population growth, and the worsening scarcity of freshwater. The country has yet to come to grips with the imminent oil decline and its consequences. The Government is concerned about governance problems and is recently attempting to speed up reforms. The last two challenges-high population growth and water crisis- are long recognized by the government, but reforms have been slow. -
Publication
Republic of Tunisia - Development Policy Review : Making Deeper Trade Integration Work for Growth and Jobs
(Washington, DC, 2004-10)Given a steady pace of structural reforms, and sound macroeconomic management, Tunisia experienced a fast, and sustained growth. However, while forward-looking policies helped preserve external and internal balances, challenges remain in the context of a volatile external environment. High and pro-poor growth, contributed to a sharp reduction in poverty in the second half of the 1990s, yet, despite strong growth, unemployment remains high, at around 15 percent, partly reflecting demographic pressures, and partly the decrease in the employment intensity of growth. Moreover, weaknesses in economic governance, in particular regarding the predictability, and transparency of the regulatory framework, and market contestability, may be an important constraint to private investment. Tunisia faces a turning point where, unless coordinated efforts to improve the quality of economic governance, and stimulate private investment are placed at the core of the reform agenda, the deeper engagement with the world, may not fulfill its development promise. Policies will be needed to make Tunisia's deeper trade integration work for growth, and jobs: Strengthening the investment climate, by improving economic governance; Improving the functioning of the labor market; Strengthening the soundness of the banking system and fostering the development of securities markets; Securing a robust medium-term fiscal framework; Enhancing the efficiency of education policies; Strengthening the effectiveness and sustainability of social sector policies; Lowering transactions costs for business entry, operation, and exit; Enhancing transparency and predictability of the regulatory framework; Enhancing market contestability, by reducing barriers to entry in key infrastructure services - and by strengthening competition policy - furthering Tunisia's international trade integration. The Tunisian banking sector has better room for dynamic growth, thanks to a gradually reduced government ownership, in spite of high non performing loans. Education is one of the principal pillars of Tunisia's strategy for development, as it aims to build the human capital necessary to compete in the global knowledge-based economy. -
Publication
Jordan - Development Policy Review : A Reforming State in a Volatile Region
(Washington, DC, 2002-11-05)Since the early 1990s, Jordan has initiated efforts toward far-reaching stabilization and structural reform. The reforms have aimed at laying the foundations for a reduced role of the state, private-sector-export-oriented-growth, employment, poverty reduction, and overall improvement in the welfare of the population. Due to this intensive effort, inflation has been reduced, the current account of the balance of payments has been stabilized, and budget deficits have been reduced. In addition, structural reforms have encompassed domestic taxation/subsidy policies, trade liberalization policies, monetary/financial sector policies, exchange rate policies, administered prices, and privatization. The reforms initiated since 1989 have made Jordan one of the leaders of reform in the Middle East and north Africa region, despite its experiencing several changes in government and adverse external shocks in the 1990s. The country has further integrated into the global economy, with a major shift in trade policy that included an Association Agreement with the European Union in 1999, membership in the World Trade Organization in 2000, and a free-trade agreement with the USA in 2001. Jordan has achieved progress in privatization, most notably in public utilities. Despite deep structural reforms and macroeconomic stability, strong and sustainable growth in real output has been elusive. Three factors have been identified as major constraints to faster growth: 1) external volatility and adverse regional neighborhood effects; 2) slow response of private investment, both in its level and in terms of productivity; and 3) significant export competitiveness problems. Increasing growth performance as a means to reduce poverty and improve the welfare of Jordanians is the first key development challenge identified in this Development Policy Review. The other key development challenge in Jordan is to improve the quality and efficiency of its core public services. Efficient delivery of public services is especially critical in education and health and in the water sectors. -
Publication
The Republic of Yemen : Comprehensive Development Review, Environment
(Washington, DC, 2000-01-21)The review focuses on development and the environment in Yemen, particularly analyzing the environment resource base, where renewable fresh water is scarce, mainly ground water, and its over exploitation is one of the country's major environmental problems. Fisheries resources are also important, while oil and gas are significant resources contributing to some eighty five percent of Yemen's export revenues. Environmental problems are caused fundamentally due to: population growth; poverty; and institutional weaknesses. Main issues discussed include water depletion, pollution and supply; land, and habitat degradation, in addition to soil erosion; and, loss of biodiversity, mostly resulting from poor management of water and eco-tourism. Waste water and solid waste management, including hazardous waste and pesticide management, are outlined as serious environmental problems, requiring immediate appropriate disposal. Priority actions of the national environment action plan identify the need for institutional capacity building regarding environmental management, to include local pilot programs, as well as disaster preparedness at Aden, and Hodeidah ports concerning oil spills. Likewise, the water resources authority should be strengthened, to include the development of water resources information systems, and a comprehensive Water Law. Land use planning should be established to promote land zoning, and registration; a desertification control program should be implemented, and grazing reserves, and pest management techniques promoted. It is suggested waste management would be improved through privatization of solid waste collection, of water treatment, and of disposal of hazardous wastes, while the regulation of hospital waste disposal, should undergo pilot testing.