Arab world needs an economic revolution
The momentum of the "Arab Spring" has been mesmerising, yet the future is uncertain. The Middle East and North Africa (MENA) lags behind other emerging markets in ease of doing business and in competitiveness, and it is undeniable that social change must go hand in hand with economic reform.
The Arab world must embrace a reliable path to economic growth. Nurturing an entrepreneurial culture is crucial. According to the Doing Business 2011 report by the World Bank and International Finance Corporation, MENA still lags behind East Asia and the Asia-Pacific and Eastern Europe and Central Asia in terms of the most business-friendly environments.
The World Economic Forum's Global Competitiveness Index reveals that much of the Arab world is held back by institutions that do not allow for talent mobility and lack high-quality professional management. Without an economic and social environment supportive of entrepreneurship, efficiency suffers, talent is wasted, education is undervalued, competitiveness is hobbled and growth is imperilled.
The Arab world must lay the educational foundations to produce the next generation of entrepreneurs, and challenge barriers to entrepreneurial activity. Both are essential for ensuring sustainable growth within a highly competitive global economy and to guarantee that the youths driving change in the Arab Spring can look forward to a future that includes being gainfully employed. With such a young population in Arab countries, there is an urgent question about how to create the jobs that are needed in the short, medium and long term to capitalise on this particular demographic.
To this end, we need open discussion of the cultural and institutional barriers to entrepreneurship in the Arab world. This discussion should be frank about where social and political institutions are too conservative, and take steps to end institutional secrecy, and therefore combat corruption.
The discussion must challenge deeply ingrained habits, such as making promotions on the basis of family connections and social status, as well as challenging overly bureaucratic attitudes in which decision-making becomes complex, laborious and above all, slow.
Ultimately, discussion should channel the momentum for political change further, into inspiring confidence in the essentials of entrepreneurship - meritocracy, transparency and education.
The benefits that can flow from challenging barriers to entrepreneurship are immense in terms of unlocking human potential and setting out paths for growth, recovery and progress by fuelling innovation, employment generation and social empowerment.
The opportunity to create the right climate for entrepreneurship should be seized now, while there is still time to reap the benefits. In the past, inaction may have been encouraged by reliance on the economic gift of oil. That gift will not last forever.
Not every Arab nation in the region has benefited from oil - particularly Egypt, which has by some distance the greatest population in the region. Yet even the oil-producing states with the greatest reserves must plan for the inevitable day when the oil runs out. The pursuit of a more open and entrepreneurial economic model will help to diversify economic activity as peak oil passes.
A more transparent and meritocratic structure would also provide new tools to deal with the region's pressing demographic issue. The Arab world has some of the world's youngest populations. This increases pressure on resources and threatens an exponential growth in unemployment.
The encouragement of entrepreneurship, together with the open and even-handed administration of public policy, must be an essential element in providing sustainable, diversified economic growth in the Arab world. The competitive nature of the world economy offers clear rewards for countries that implement best practice in these areas.
Børge Brende is the managing director of government relations and constituents engagement at the World Economic Forum, which is holding a meeting on economic growth and job creation in the Arab world, in Jordan, starting tomorrow.
- DP World’s profits soared by 41 percent in H1. What’s their secret?
- Kingdom’s SMEs hold stronger outlook for Q3
- Jordan's King Abdullah has a 10-year plan for the country's economy
- Dubai's economy could have an optimistic future with a 5.6 percent growth this year
- Ups and downs: Jordan's public debt is up and ratio to GDP is down