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PublicationMiddle East and North Africa Economic Monitor, October 2015: Inequality, Uprisings, and Conflict in the Arab World(Washington, DC: World Bank, 2015-10-21) Ianchovichina, Elena; Mottaghi, Lili; Devarajan, ShantayananThe short-term prospects for a growth recovery in the Middle East and North Africa (MENA) are slim in the context of low oil prices and conflict escalation. Regional GDP growth, estimated at around 2.8 percent in 2015, will remain weak if current circumstances persist. In fact, since the Arab Spring, the region has seen a growth slowdown and a rise in the incidence of civil wars. This report explores how the region got to this state. It examines whether inequality or other factors contributed to the Arab Spring uprisings as well as to the ensuing conflicts. The report concludes that expenditure inequality, which was relatively low and declining, could not been a major factor in triggering the Arab Spring events, although wealth disparities, which are typically higher, could have been. Instead, we find that ordinary people, especially the middle class, were frustrated by the decline in their standards of living, related to the shortage of quality jobs, the poor quality of public services and lack of government accountability. The report also explores whether inequality played a role in the increase in the incidence of violence after the Arab Spring and finds suggestive evidence that intergroup inequality, rather than monetary inequality, contributed to the escalation of conflict. PublicationThe World Bank Annual Report 2015(Washington, DC, 2015-10-02) World BankThe Annual Report is prepared by the Executive Directors of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA)--collectively known as the World Bank--in accordance with the by-laws of the two institutions. The President of the IBRD and IDA and the Chairman of the Board of Executive Directors submits the Report, together with the accompanying administrative budgets and audited financial statements, to the Board of Governors. PublicationEconomic Monitoring Report to the Ad Hoc Liaison Committee(Washington, DC, 2015-09-30) World BankPalestinians are getting poorer on average for the third year in a row. As evidenced in previous World Bank reports, the competitiveness of the Palestinian economy has been progressively eroding since the signing of the Oslo accords, in particular its industry and agriculture. Even though donor aid had increased government-funded services and fueled consumption-driven growth during 2007 to 2011, this growth model has proved unsustainable. Donor support has significantly declined in recent years and, in any case, aid cannot sustainably make up for inadequate private investment. Thus, growth has started to slow since 2012 and the Palestinian economy contracted in 2014 following the Gaza war. In early 2015, GDP was still lower than it was a year ago. Due to population growth, real GDP per capita has been shrinking since 2013. Unemployment remains high, particularly amongst Gaza’s youth where it exceeds 60 percent, and 25 percent of Palestinians currently live in poverty. Against the backdrop of weak economic growth, reduced donor aid, and temporary suspension of revenue payments by the Government of Israel (GoI), the Palestinian Authority’s reform efforts have not been able to prevent another year with a financing gap. The persistence of this situation could potentially lead to political and social unrest. In short, the status quo is not sustainable and downside risks of further conflict and social unrest are high. PublicationMENA Quarterly Economic Brief, July 2015: Economic Implications of Lifting Sanctions on Iran(World Bank, Washington, DC, 2015-07) Devarajan, Shanta; Mottaghi, LiliIran and the Permanent Members of the UN Security Council and Germany (P5+1) reached a deal on July 14, 2015 that limits Iranian nuclear activity in return for lifting all international sanctions that were placed on Iran (Box 1). This issue of the MENA Quarterly Economic Brief (QEB) traces the economic effects of this development—removing sanctions on Iran—on the world oil market, on Iran’s trading partners, and on the Iranian economy. PublicationWorld Development Report 2015: Mind, Society, and Behavior(Washington, DC: World Bank, 2015) World Bank GroupEvery policy relies on explicit or implicit assumptions about how people make choices. Those assumptions typically rest on an idealized model of how people think, rather than an understanding of how everyday thinking actually works. This year’s World Development Report argues that a more realistic account of decision-making and behavior will make development policy more effective. The Report emphasizes what it calls 'the three marks of everyday thinking.' In everyday thinking, people use intuition much more than careful analysis. They employ concepts and tools that prior experience in their cultural world has made familiar. And social emotions and social norms motivate much of what they do. These insights together explain the extraordinary persistence of some social practices, and rapid change in others. They also offer new targets for development policy. A richer understanding of why people save, use preventive health care, work hard, learn, and conserve energy provides a basis for innovative and inexpensive interventions. The insights reveal that poverty not only deprives people of resources but is an environment that shapes decision making, a fact that development projects across the board need to recognize. The insights show that the psychological foundations of decision making emerge at a young age and require social support. The Report applies insights from modern behavioral and social sciences to development policies for addressing poverty, finance, productivity, health, children, and climate change. It demonstrates that new policy ideas based on a richer view of decision-making can yield high economic returns. These new policy targets include: the choice architecture (for example, the default option); the scope for social rewards; frames that influence whether or not a norm is activated; information in the form of rules of thumb; opportunities for experiences that change mental models or social norms. Finally, the Report shows that small changes in context have large effects on behavior. As a result, discovering which interventions are most effective, and with which contexts and populations, inherently requires an experimental approach. Rigor is needed for testing the processes for delivering interventions, not just the products that are delivered.