Publication: Middle East and North Africa Economic Developments and Prospects, October 2013 : Investing in Turbolent Times
Loading...
Files in English
903 downloads
Published
2013-10
ISSN
Date
2014-01-17
Author(s)
Editor(s)
Abstract
This report explores the effect of political risk on foreign direct investment (FDI) flows to countries in the Middle East and North Africa. FDI flows dominated capital flows to MENA in the period since the early 2000s and the drop in FDI has been an important component of the economic decline since 2010. The report shows that political turbulence has affected not only the level of FDI flows to the region, but also its composition. It has skewed greenfield FDI, which is the major mode of entry into MENA, towards resource activities that create the least jobs and the non-tradable sectors. At the same time, political shocks have discouraged the high quality greenfield FDI in non-resource tradable manufacturing and services needed for export upgrading and diversification. By hurting these efficiency-seeking investments, shocks to political stability entrench resource dependence and exacerbate the clustering of FDI in the extractive industries and nontradable sectors – a problem associated with the weak business climate and political capture that predate the Arab Spring. Special focus will be needed on reforms that improve competition, transparency, and accountability.
Link to Data Set
Citation
“World Bank. 2013. Middle East and North Africa Economic Developments and Prospects, October 2013 : Investing in Turbolent Times. © World Bank. http://hdl.handle.net/10986/16577 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Middle East and North Africa Economic Developments and Prospects, October 2012 : Looking Ahead After a Year in Transition(Washington, DC, 2012-10-01)The Arab Republic of Egypt, Tunisia, Libya and the Republic of Yemen are recovering after a period of economic growth decelerations accompanying the Arab Spring uprisings of 2011. Economic recovery was relatively quick, with industrial production recovering in a matter of months and, in the cases of Egypt and Tunisia, the growth dips of 2011 were smaller than the average growth declines observed around the year of transition during past transitions to democracy. Importantly, the growth decelerations and recovery have taken place in a weak global environment, with events in the Euro zone posing particular challenges to Tunisia, and to a lesser extent, Egypt. The report focuses on the economic developments and short-term outlook for four Middle East and North Africa (MENA) Economies, Tunisia, Egypt, the Republic of Yemen and Libya. These four countries are given special attention because each of them experienced a revolution and a major political change in 2011 and is undergoing a process of political transition toward democracy. The sudden change had important economic consequences. While other countries in the Middle East and North Africa are undergoing political change, the economic ramifications were muted as compared with the changes observed in the four MENA post-revolutionary economies.Publication Middle East and North Africa Economic Developments and Prospects, September 2011 : Investing for Growth and Jobs(Washington, DC, 2011-09)The report highlights the important links between good governance on a level legal and regulatory playing field, and the ability of investment to stimulate growth. Investment in the Middle East and North Africa (MENA) region has been strong over the last two decades in comparison with Latin America and Eastern Europe. However, in the oil exporting countries, it has been primarily supported by large and expanding public investments. Oil importers, in contrast, have shown more strength in private investment, which has increased in recent years. A concern with reliance on public investment is that in economies with weak governance there is no evidence that public investment stimulates growth. In contrast, in countries with an adequate level of protection of property rights and legal institutions, public investment is strongly linked to growth. The report also makes a strong case for private investment in services and manufacturing as engines of job creation and income growth in the region.Publication Middle East and North Africa Economic Developments and Prospects 2006(Washington, DC: World Bank, 2006)This edtion of the Middle East and North Africa (MENA) economic developments and prospects reports highlights the recent key economic developments as well as the forces underlying the region's economic outcomes. It analyzes the region's medium term growth prospects given global forecasts, and charts the region?s progress with implementing comprehensive structural reforms needed for longer-term growth. For the third year in a row, MENA enjoyed a spectacular year of growth, buoyed by record high growth rates among the region's oil exporters. As oil prices continued their upward climb, the MENA region grew by an average of 6.0 percent over 2005, up from 5.6 percent over 2004, and compared with average growth of only 3.5 percent over the late 1990s. On an annual basis, MENA's average economic growth over the last three years, at 6.2 percent per year, has been the highest three-year growth period for the region since the late 1970s. MENA's regional growth upturn has not been universally shared, however, and resource poor economies are increasingly feeling the adverse impact of higher oil prices. Growth patterns among oil producers, on the other hand, have been increasingly harmonized, reflecting a trend toward common development strategies. Over the medium term, general conditions for maintaining a solid pace for growth appear promising. The oil shock MENA is experiencing has had important financial spillovers. Over the last few years, MENA has seen an upsurge in financial activity, as abundant liquidity has fed a rapid rise in credit growth, surging stock markets, and a booming real estate sector. A troubling aspect about MENA's financial markets is the seeming disconnect between the financial sector and the real private economy, despite the appearance of a relatively deep financial sector by macroeconomic indicators. Along with across the board policy reform, MENA economies continue to look to selective industrial policies designed to enhance specific sector competitiveness and growth to complement more broad-based structural reform. Although the views on industrial policy are changing, and a variety of economic justifications can be made for their use, MENA's own unsuccessful history with industrial policies (and the difficulty in transitioning out of them) should serve as a cautious reminder that the most effective policies for promoting growth rely on strategies to create a neutral and internationally competitive business environment.Publication MENA Economic and Development Prospects 2013 : Investing in Turbulent Times(World Bank, Washington, DC, 2013-11)The political and social upheavals that followed the Arab Spring of 2011 continue to dominate economic activity and near term prospects in the Middle East and North Africa (MENA). Although political transitions bring promises of greater political and economic freedom, in MENA the process remains far from complete and has been accompanied by increased political and macroeconomic instability in 2013. In Egypt, rising social and political tensions weighed heavily on confidence. In Syria, a marked escalation of the civil war exacted a heavy economic and human toll, with spillovers to neighboring Lebanon, Jordan, and Iraq. Oil production in developing MENA oil exporters has fallen because of security setbacks, infrastructure problems, strikes, and in the case of Iran, economic sanctions. The outlook for 2013-and more so for 2014, is uncertain and subject to a variety of risks, mostly domestic in nature and linked to political instability, while global economic conditions have become more favorable. In 2013, economic growth is expected to remain weak or weaken relative to 2012 across MENA and average 2.8 percent, down from the estimated 5.6 percent in 2012. Growth has been most volatile in the MENA's developing oil exporting countries, and is projected to slow down considerably due to unfavorable developments, especially in Libya, Iran, and Syria. Some aspects of instability, including the quality and stability of government institutions and policies, did play a role, but others, such as democratic accountability, did not. Furthermore, Foreign Trade Investment (FDI) flows to the resource intensive and non-tradable sectors appear immune to political instability, but FDI flows to the tradable sectors exhibit a clear negative response.Publication Middle East and North Africa Economic Developments and Prospects 2005(Washington, DC, 2005-04-01)The edtion of the Middle East and North Africa (MENA) economic developments and prospects reportsanalyzes the region's short-term growth prospects given global forecasts and current structural features of the economies, as well as the region's prospects for longer-term growth based upon progress in implementing comprehensive structural reforms. MENA region has experienced exceptional growth over the last two years. Over 2003 and 2004, economic growth in MENA averaged more than 5.6 percent a year, the strongest growth in a decade, and up strongly from the 3.6 percent average yearly growth over the 1990s. On a per capita basis, the MENA region's 3.5 percent average growth over the last two years was the region's strongest growth performance since the mid-1970s. Accompanying this strong growth performance, unemployment has declined with the rise in oil prices over 2000- 2004. Unemployment is estimated to have fallen from about 14.9 percent of the labor force in 2000 to 13.4 percent currently, the result of a 37 percent increase in the rate of employment creation over the 1990s. In many respects, the MENA region is in the midst of an economic boom. However, there are caveats to the region's growth acceleration. For one, it has not been especially broad based. Comparing growth over the 1990s with growth over the last two years, 97 percent of the regional growth upturn was driven by just four countries - Saudi Arabia, the Islamic Republic of Iran, Algeria and the United Arab Emirates. In fact, nearly half of the region actually experienced growth downturns relative to the 1990s. Moreover, MENA's recent positive economic developments have been driven largely by external events - in particular, dramatically rising oil prices. And importantly, on a per capita basis, the MENA region's growth over the last two years continues to lag that of other regions, a reflection of both the firming of GDP growth rates across developing regions and the MENA region's high population growth.
Users also downloaded
Showing related downloaded files
Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Doing Business 2014 : Understanding Regulations for Small and Medium-Size Enterprises(Washington, DC: World Bank Group, 2013-10-28)Eleventh in a series of annual reports comparing business regulation in 185 economies, Doing Business 2014 measures regulations affecting 11 areas of everyday business activity: Starting a business, Dealing with construction permits, Getting electricity, Registering property, Getting credit, Protecting investors, Paying taxes, Trading across borders, Enforcing contracts, Closing a business, Employing workers. The report updates all indicators as of June 1, 2013, ranks economies on their overall “ease of doing business”, and analyzes reforms to business regulation – identifying which economies are strengthening their business environment the most. The Doing Business reports illustrate how reforms in business regulations are being used to analyze economic outcomes for domestic entrepreneurs and for the wider economy. Doing Business is a flagship product by the World Bank and IFC that garners worldwide attention on regulatory barriers to entrepreneurship. More than 60 economies use the Doing Business indicators to shape reform agendas and monitor improvements on the ground. In addition, the Doing Business data has generated over 870 articles in peer-reviewed academic journals since its inception.Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.