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Jobs or Privileges

Unleashing the Employment Potential of the Middle East and North Africa

Marc Schiffbauer, Abdoulaye Sy, Sahar Hussain, Hania Sahnoun and Philip Keefer
World Bank, 2014
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Editorial Rating

7

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Recommendation

Corruption, bureaucracy and the difficulty of conducting commerce in an open and transparent manner make developing new business in the Middle East and North Africa particularly challenging. In this incisive World Bank report, analysts Marc Schiffbauer, Abdoulaye Sy, Sahar Hussain, Hania Sahnoun and Philip Keefer examine why Algeria, Djibouti, Egypt, Iran, Iraq, Jordan, Lebanon, Libya, Morocco, Syria, Tunisia, West Bank and Gaza, and Yemen experience high unemployment, low productivity, opaque policies and pivotal industries heavily tied to powerful politicians. The authors examine the problems that cronyism cause, using new data available in the aftermath of the Arab Spring to quantify the cost of corruption. getAbstract considers their painstaking report important reading for executives, investors, policy makers and leaders of nongovernmental organizations.

Summary

Business Favoritism

Government policies and business practices that prioritize personal relationships and encourage favoritism are common in many countries in the Middle East and North Africa (MENA). These approaches reduce competition and create a biased environment that constrains economic growth and the formation of a healthy private sector. The region’s inability to generate new jobs affects all its citizens. MENA faces “the world’s highest unemployment rates among college graduates and youth, and the lowest participation of women in the labor force.”

The societal privileges of the business elite prevent potential entrepreneurs from starting new enterprises, inhibits firms from accessing needed government services, adds hurdles to firms without political affiliations, protects favored businesses and industrial sectors from foreign competition, and removes incentives for local firms to compete globally.

Supply-side factors, such as problematic labor rules and a poorly educated or untrained workforce, play a part in MENA’s high joblessness rates but don’t fully explain the problem. Demand-side issues – such as skewed economic policies, business procedures and...

About the Authors

Marc Schiffbauer is a senior economist at the World Bank, where Abdoulaye Sy, Sahar Hussain and consultant Hania Sahnoun are economists. Philip Keefer is a principal adviser at the Inter-American Development Bank.

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