From Privilege to Competition: Unlocking Private-Led Growth in
the Middle East and North Africa sheds new light on the difficult
quest for stronger and more diversified growth in a region of
unquestionable potential. It underlines the need to strengthen reforms
in many areas—specifically, by reducing policy uncertainty and
improving credit and real estate markets. It also highlights other
important issues that restrain the credibility and impact of reforms in
many parts of the region: conflicts of interest between politicians and
businesses, an investment climate that favors a few privileged firms,
and a dominant private sector that often opposes reforms.
The book recommends that countries in the Middle East and North
Africa (MENA) engage in more credible reform agendas by improving the
implementation of policies in a manner that will reduce discretion and
privileges. This renewed commitment to stronger growth would entail
several developments. First, governments will need to reduce
opportunities for rent-seeking and foster competition. Second, they
will need to work to reform institutions: private sector development
policies will need to be systematically anchored in elements of
institutional and public sector reforms in order to reduce discretion
and opacity and improve the quality of services to firms. Third, they
will need to mobilize all stakeholders, including larger
representations from the private sector, around dedicated long-term
growth strategies. Short of such a fundamental shift in the way private
sector policies are formulated and implemented, investor expectations
that governments are committed to reform will be limited. It will take
political will—and time—to support sustained reforms that
credibly convince investors and the public that changes are real, deep,
and set to last.
MENA countries are endowed with strong human capital, good
infrastructure, immense resources, and a great deal of untapped
creativity and entrepreneurship. The economic and social payoff of
embarking on a more ambitious private-led growth agenda could thus be
immense—for all.
"With the urgent need to generate incremental productive
employment and growth, the Middle East and North Africa region faces
unique challenges. This book clarifies the nature of these challenges.
Instead of advocating for more reforms in all areas of the business
environment, the book highlights the role of leadership. In so doing,
it speaks to one of the central themes of The Growth Report:
Strategies for Sustained Growth and Inclusive Development, the
importance of a government committed to the economic process of rapid
and sustained growth, using the resources of the global economy,
growth-oriented macroeconomic policies, a future orientation, and
reliance on markets for resource allocation. Policy makers, scholars,
and development practitioners will find this book a relevant and
insightful analysis of the challenges of growth and development in the
region."
- Michael Spence, Chairman of the Commission on
Growth and Development and
the Recipient of the 2001 Nobel Prize in Economics
TABLE OF CONTENTS
Overview
What Is This Report About? • Is the Private Sector Able to Play
the Role of a Growth Engine? • How Has the Private Sector
Performed So Far? • Is It about Missing Reforms? • Is It
about the Way Rules Are Implemented? • Why Is It Difficult to
Improve the Business Environment in the Region? • Weak Demand for
Reform: A Private Sector That Has Yet to Become an Agent of Change
• Weak "Supply" of Reforms: Policy-Making Institutions
That Lack Credibility • What Should Be Done Differently? Where
Should Each Country Start? • Getting Specific: A Roadmap for
Credible Private-Led Growth Strategies in MENA • Looking
Forward
1. Voices of Entrepreneurs—Stories of Success, Hope, and
Challenge
Listening to Entrepreneurs • Government Successes and Pitfalls in
Supporting the Private Sector • Challenges Facing
Entrepreneurs—From Regulatory Barriers to Conflict and War
• Privileges, Unlevel Playing Fields, and the Credibility of the
Reforms • Hope and Enthusiasm for the Future
PART I. PRIVATE SECTOR PERFORMANCE IN THE MENA REGION: EXPLAINING
THE UNTAPPED POTENTIAL
2. Searching for Signs of Sustained Private-Led Growth in
MENA
The Growth of MENA Economies • An Economy-Wide Perspective
• Firm-Level Productivity • Summing Up
3. Explaining the Private Sector's Weak Performance—An
Organizing Framework
The Need for Humility in Prescribing the Keys to Private-Led Growth
• Policies, Institutions That Implement Them, and Expectations
about the Future • Measuring Rules, How They Are Applied, and
Expectations about the Future
4. Policy Reforms in MENA, Their Credibility, and Their
Implementation
Is the Problem with Missing Reforms? • The Problem Is the
Insufficient Private Sector Response to Reforms • Is It about the
Way Rules and Policies Are Implemented? • Symptoms of a Business
Environment That Is Not the Same for All • Summing Up
PART II. POLICIES AND HOW THEY ARE APPLIED: STATE INTERVENTION
AND DISCRETION IN CREDIT, LAND, AND INDUSTRIAL POLICY
5. Access to Credit in MENA: Toward Better Supervision and Less
Interference
Credit Markets and Banking Systems in MENA • Business Manager
Perceptions of Credit Constraints • Beyond Perceptions and
Complaints: How Many Firms Are Really Credit Constrained? • What
Can Governments Do to Increase Access to Credit?
6. Reassessing the State's Role in Industrial Land
Markets
The Low Access to Land in MENA Countries • Sources of
Inefficiencies in Land Markets • Getting the Incentives Right in
Enclaves • Power and Rent Seeking in Public Land Allocation and
Regulation • The Way Forward
7. New Industrial Policies: Opportunities and Perils of Selective
Interventions
A Tradition of Subsidies and Selective State Interventions • A
Framework to Clarify a Controversial Debate • Private Sector
Policies in MENA—A Legacy of Disproportionate Interventionism
• Assessing Risks of Industrial Policy Interventions •
Should Oil-Rich Countries Intervene? Yes, but the Risks of Failure Are
Higher • A Final Cautionary Note: Industrial Policies Could
Succeed if the Right Conditions and Processes Are in Place
PART III. DESIGNING CREDIBLE PRIVATE SECTOR REFORMS INFORMED BY
POLITICAL ECONOMY REALITIES
8. Institutions and State-Business Alliances Constraining Reforms
and Credibility
Weak Supply of Reforms: Policy-Making Institutions That Lack Commitment
and Credibility • Weak Demand for Reform: A Private Sector That
Has Yet to Become an Agent of Change • What Can Reformers Do to
Change the Political Economy Status Quo?
9. Rethinking Private Sector Policy Making in MENA
What Should Be Done Differently to Realign Investor Expectations?
• Looking Forward: Unlocking the Region's Private Sector
Potential
- Shipping Weight: 1.28 lbs (0.58 kgs)
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