The Arab world needs growth rates like those of Asias tiger economies if it is to avoid unemployment ballooning over the next two decades, Mustapha Nabli, the World Banks chief economist for the Middle East and North Africa, said Friday at a World Economic Forum (WEF) regional meeting in Jordan, according to the World Bank press review.
Nabli said that the regions population growth was such that demand for jobs was increasing at a yearly rate of 3,5 percent. – This is a big number by any standards. It means a doubling of the number of jobs over 20 years. You need to create as many jobs as exist today, he noteed.
Nabli said that if economic growth and job creation stayed at current rates in the region, unemployment would inflate within 15 to 20 years to between 20 percent and 25 percent. To combat this, Arab economies needed to grow at rates of between 6 percent and 7 percent a year to create the jobs, putting them on a par with dynamic Asian emerging market economies.
But the Arab world is far from achieving such rates. In the past decade, economic growth in the region has averaged around 3,7 percent a year, according to figures cited in a WEF study on competitiveness. And the scope of jobs needed is huge, according to the study. With an existing 13 percent unemployment rate, some 77 million new jobs will be needed over about 20 years for Arab economies to cope.
While some efforts at economic reform have been undertaken in various Arab countries, they have not been enough to create integrated economies. – Exports to the rest of the world, if you take out oil … are very little, Nabli said.
He added that the only way out of the dilemma for the region was growth. – There is no other way. And the growth has to come from the private sector, he said. What was needed, he added, was better governance in Arab countries to allow the moves needed to help Arab economies thrive.
Meanwhile, politicians and business leaders called on Arab countries to build on a fledgling climate for reform and accelerate painful changes Sunday as they wrapped up the three-day meeting of the WEF. The gatherings host, King Abdullah II of Jordan, said that Arab governments needed to respond to the public appetite for reform.
More than 50 separate panel discussions came up with a raft of concrete proposals that will be consolidated into a reform package to be dubbed “Vision 2010”. WEF Executive Chairman Klaus Schwab told participants they should prioritize education and political empowerment in the reform process.
The Daily Star of Lebanon further reports that Peter Brabeck-Letmathe, co-chair of the WEF said it is alarming that the population of the MENA (Middle East and North Africa) region is expected to double in 30 years, but is currently receiving just one percent of global foreign direct investments.
The CEO of National Bank of Kuwait, Ibrahim Dabdoub, told another panel that the size of Arab economies as a whole is between 650 billion to 700 billion US dollar, only the size of Spains Gross Domestic Product.
Sean Cleary, managing director, Strategic Concepts, South Africa, said the Vision 2010 agenda sets extremely ambitious goals in four broad areas: privatization, free trade, labor reform and developing the business environment.
– The objective is to integrate the region into the global economy by encouraging specialization, entrepreneurship and support education, he said.
Based on the program, the region should be able to achieve economic growth rates of six to seven percent per year. But the economy and planning minister of the United Arab Emirates, Sheikha Lubna al-Qasimi, said achieving that would require “painful changes, reforms which have proven difficult to achieve,” even during good times.
Arab business leaders further launched a new task force on the sidelines of the WEF Sunday to address the extremely low level of foreign investment in the region.
The task force, launched by the Arab Business Council with the help of the Group of Eight most industrialized nations, aims to bring Arab governments together with foreign companies to discuss the obstacles to investment.
It will hold several meetings a year with the aim of coming up with specific recommendations to governments for regulatory and other changes.
Arab countries attracted just two percent of foreign direct investment inflows last year, a fraction of their potential.
Kilde: www.worldbank.org
