Tag Archives: economic reform

What Good is Economics as a Science, if Not Based on Field Studies?

Reem_Abdel_Halim

By Dr. Reem Abdel Haliem

This post originally appeared in Arabic on the CIPE Arabia blog.

I currently work with CIPE partner the Federation of Economic Development Associations (FEDA) on a study to bring Egypt’s informal sector into the formal one. Since there are number of studies on this topic, FEDA chose to focus its study on producing a guide – more of a roadmap – that outlines practical steps to facilitating the informal sector’s formalization.

A series of focus groups based on a robust methodology was a must to achieve sound findings and to draw evidence-based conclusions. Through those focus groups, we formed a logical and comprehensive understanding of the problems that the formal sector faces, so to grasp the disincentives that make the idea of formalizing unattractive to the informal sector. Formal sector operators face these problems almost on a daily basis and with a variety of local and national government authorities. This understanding could not be reached through a typical literature review.

Through my experience in the focus groups and with drafting this roadmap, it became clear to me that with the right field research tools, grasping the on-the-ground reality makes policy recommendations more accurate and relevant to addressing the stakeholders’ needs and, as such, makes these recommendations of higher value to the state and the general public.

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The Tunisian Business Community: Still Working to Keep Tunisia’s Democracy on Track

A forum held by IACE in May 2016. (Photo: Kapitalis.com)

A forum held by IACE in May 2016. (Photo: Kapitalis.com)

By Ali Ayadi, Pam Beecroft, and Brenna Curti

In 2015, Tunisia’s business community, government and civil society worked together to overcome a series of political and security crises that almost derailed their grand democracy experiment, and won a Nobel Prize for their efforts.

Now it is the economy that needs an intervention. Instead of transforming and growing, it has been sliding backward. The Tunisian dinar is losing value, public debt is mounting, inflation continues to rise, and unemployment grows daily. Corruption and cronyism are rampant, spreading injustice and slowing growth even more.

As Tunisians lose faith in their leaders, discontent is fueling new social unrest. Violence and terrorism have added new layers of economic woes, virtually wiping out tourism and resulting in $4 billion for economic recovery being diverted to cover national security needs.

It is no exaggeration to say that Tunisia’s democratic future hinges on fixing all this. For one thing, if citizens are worried about basic survival, they cannot focus on elections and civic groups and all those other things that keep leaders accountable and democracy vibrant. For another, Tunisia needs the spirit of enterprise itself – economic dreams, hard work, innovation, and entrepreneurship – to create the prosperity citizens need.

That is why CIPE’s long-time partner, the Arab Institute for Business Leaders (IACE, in French) has joined with one of the Nobel prize winners, the Tunisian Union for Industry, Commerce and Crafts (UTICA), as well as the Tunisian Union for Agriculture and Fisheries (UTAP) and the government, to get Tunisia’s economy back on track. With CIPE support, they have launched a “National Business Agenda” (NBA) – a CIPE process that helps the private sector consult local businesses, identify economic priorities and advocate government to improve the economy through reforms.

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Debate on Taxation in Pakistan: Reforms Move to the Next Level

Photo: Wikimedia Commons

Karachi Photo: Wikimedia Commons

Pakistan’s overall tax-to-GDP ratio has been hovering around 10 per cent for the past decade, which is approximately five per cent lower than the average of comparable economies. Despite a large tax base available in all provinces, they collectively contribute only seven per cent in overall revenues.

Federal revenues are low, and government coffers are emptied by debt servicing, high defense spending, and power subsidies, resulting in government institutions without adequate budgets to operate. Without tax reform, Pakistan’s civilian government and its ability to govern remains weak and ineffective. Moreover, Pakistan remains on the brink financial crisis.

Since the passage of a constitutional amendment in 2010 aimed at rolling back the excessive power the central government had built up over years of military rule, the provincial administrations have been entrusted with greater revenue mobilization responsibilities. The amendment was intended to bring education, health, and other basic government services closer to the people and help develop areas that were historically ignored by Islamabad, and was viewed as an important first step in a series of reforms to create a responsive and accountable democratic Pakistan.

However, empowering provinces without the proper mechanisms in place for implementation, and conflict resolution, and without strengthening revenue raising capability at the provincial level, has resulted in greater duplication of bureaucratic structures and processes at central and provincial levels, leading to more wasteful spending and higher budget deficits. Moreover, government services that are now to be provided by the provincial governments are often not provided at all, as provincial governments themselves appear confused or reluctant to take on service delivery and financial responsibilities.

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CIPE Arabia: Expert Interview with Dr. Ahmed Fikry Abdel Wahab

Ahmed_Fikry_Abdel_WahabThis post originally appeared at CIPE-Arabia in Arabic.

In a brief interview with CIPE-Arabia, Dr. Ahmed Fikry Abdel Wahab shared some of his thoughts on the pervasive informal sector in Egypt.  His concerns center on the potentially negative consequences a large informal sector has on competitiveness, market values, and norms and quality of products.  Abdel Wahab explained that while one might not necessarily describe the competition between the formal and informal sector as dishonest, it could easily be described as unfair.

Unlike informal businesses, formal enterprises have higher costs, which are reflected in the pricing of their products.  In order to be able to compete, some enterprises compromise on the quality of their products thereby creating negative impacts on the industry and the overall market, as well as undermining consumer rights and the competiveness of the Egyptian products in the global market.  He acknowledged that informal businesses suffer from marginalization, lack of access to credit, and meager opportunities for training, advancement and business relations. Abdel Wahab also noted problems faced by informal enterprises in terms of limited market size, attributing this issue to the quality of their products, which are often not fit for export because they do not meet the minimal quality standards.  As a result, all these factors create unfair conditions with consequences for both sectors as they generate unhealthy competition, negatively impact the market, and undermine the foundations of industry and its values and norms.

Following is a summary of the main points raised by Abdel Wahab during the discussion.

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Democracy that Delivers Podcast #19: Former CIPE Executive Director John D. Sullivan on the Role of the Private Sector in Democracy and CIPE’s Evolution

Podcast hosts Julie Johnson and Ken Jaques with guest John D. Sullivan right).

Podcast hosts Julie Johnson and Ken Jaques with guest John D. Sullivan (right).

Former Executive Director of CIPE John D. Sullivan discusses how the private sector and a free market economy are essential for a thriving democracy and the role CIPE plays working with private sector partners to strengthen democratic institutions around the world. Sullivan recalls what led to the establishment of the National Endowment for Democracy and its core institutes, including CIPE, and how it was decided that the private sector needed to be represented in the “democracy program” that began under former President Ronald Reagan. Sullivan also discusses the important relationship CIPE developed with the Russian Chamber of Commerce, and the impact of the work of Peruvian economist Hernando de Soto on CIPE’s programs.

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Charting a Way Forward for Business in Kandahar, Afghanistan

Kandahar PBA picture 4

On April 27, the Kandahar branch of the Afghan Chamber of Commerce & Industries and 28 other major business and sectoral associations in Kandahar province, with CIPE’s support, released the Kandahar Provincial Business Agenda report at an official launch event in Kandahar City.

The PBA report lists the primary concerns of the private sector and impediments to commercial growth in Kandahar and other neighboring provinces, as well as a set of concrete policy recommendations intended to overcome these barriers.  These policy recommendations include requests to simplify business registration procedures and documents, lowering tax rates, and improving public infrastructure, as well as recommendations more specific to Kandahar province, including taking steps to improve security conditions at the border crossing in Boldak, on the Pakistani border.

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Democracy that Delivers Podcast #17: Atlas Corps Fellow Gigi Raffo on What Life is Like for Regular Citizens and Business Owners in Venezuela

Podcast host Julie Johnson (center) and guest host John Zemko with guest Gigi Raffo.

Atlas Corps fellow and social media manager at Venezuelan think tank CEDICE, Gigi Raffo (@GianninaRaffo), talks about the everyday hardships experienced by citizens in her country, the challenges facing the private sector, and how she and others are trying to make changes and build hope for the future. Raffo also talks about adjusting to the freedoms and choices offered in the U.S. and what she is learning here that will inform her work when she goes home.

Subscribe to the podcast on iTunes or on your Android device.

Listen to past episodes of our show here.

Like this podcast? Please review us on iTunes to help other listeners find the show!