Despite some of the highest investment rates in the world since the 1980s, growth in the Arab world has stagnated. At the same time, the region has failed to capture a greater proportion of international trade and capital flows, even though it is distinctly endowed with natural resources.
Development divides in the Arab world have widened even further in recent years, asserts the Arab World Competitiveness Report 2002-2003 (AWCR), newly released by the World Economic Forum in Geneva. Outdated, inefficient and inward looking state policies are at the core of the problem.
The report described private investment in the Arab world as "insufficient and inefficient," and asserted that too much investment by the government-dominated financial sector was concentrated on "alarmingly" inefficient infrastructures.
Given that almost 39 percent of the Arab world is under the age of 15, the report not only stresses the need to intensify job creation and develop educational systems that equip the population with the required skills for the rapidly evolving global economy but also emphasizes the profound environmental sustainability challenges faced by the region.
"Much of the current discussion in policy circles is essentially about necessary conditions: resolving international conflicts and tensions, macroeconomic stability and better institutions. But discussions about longer term development and competitiveness need to be complemented with discussions about growth engines," noted Peter Cornelius, director of the World Economic Forum's Global Competitiveness Program.
"The region has for too long pursued a one-dimensional growth strategy that is far too reliant on capital accumulation as the single engine for growth." Focusing on 16 countries in the region, the report pins the blame on local governments rather than outside influences.
Over the past 20 years, the Arab world has relied far too heavily on capital accumulation as the single engine for growth and has been left behind by the globalization, the report said. "The export structure of the region as a whole is still primarily based either on its absolute advantage in petroleum products, as in the case of the major oil-producing countries like Kuwait and Qatar, or on its comparative advantage in labor-intensive manufactures, as in the case of Morocco and Tunisia," it said.
Focusing on growth engines, the report underscores the urgency of continuing the reform process, particularly privatization and trade and investment liberalization. The recommendations emphasized include the following facilitating start up by promoting entrepreneurship, accelerating tax reform, improving the environment for innovation and facilitating transfer of technology.
As a platform to discuss the AWCR findings, the World Economic Forum is holding the first ever Arab World Competitiveness Meeting at its headquarters in Geneva on September 8-9, 2002. Over 250 of the political and business figures from the region as well as the heads of selected multinational corporations and international organizations will take part in the Meeting.
"In recent years, the delicate political climate in the Middle East has often overshadowed critical discussions related to economic and social development in the Arab world," observes Professor Klaus Schwab, President of the World Economic Forum. "This Report focuses on the challenges facing these countries in improving their competitiveness at a particularly critical time."
The World Economic Forum is an independent international organization committed to improving the state of the world. The Forum provides a collaborative framework for the world's leaders to address global issues, engaging particularly its corporate members in global citizenship.
Incorporated as a foundation, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. The Forum has NGO consultative status with the Economic and Social Council of the United Nations. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
