“Middle East and North Africa Reform: Rooted in Economic and Political Ground”

An intensifying demographic transition in the Middle East and North Africa (MENA) region calls for creating as many as 100 million new jobs in the next decade in order to accommodate the increasing number of entrants into the labor force. The shortcomings of past economic reforms foreshadow a massive labor crisis and potential social instability as the rising wave of youth unemployment sweeps through the region. But MENA may also have at hand a unique window of opportunity for sustained growth and development, provided that long-overdue institutional reforms – both economic and political – are introduced.

The key to successful reforms lies in understanding the profound interconnections between well-functioning markets and democratic governance. They both rely on the same set of core values and require good, inclusive governance structures that facilitate the engagement of the broader business community in reforms. A majority of legitimate business interests are not often represented in the political process. This is the case in MENA, where a handful of powerful elites monopolize access to the government while the plight of smaller firms and informal entrepreneurs goes largely unheard. The challenge – and opportunity – is to empower those long-neglected segments of MENA societies and build more productive economies capable of capitalizing on the region’s changing demographics.

A new CIPE Issue Paper addressing these issues has just been released. Please come back and discuss it on the blog.

Paper at a Glance

• The key to successful reforms in the Middle East and North Africa (MENA) region is building on the linkages between democratic governance and market economies.

• Demographic pressures, an inefficient public sector, and the need for economic diversification led by the private sector are some of the top challenges facing MENA countries.

• Meaningful reforms require moving away from entrenched state monopolies on political and economic power.

• MENA governments should focus on creating an enabling environment for the private sector to lead sustainable economic growth and job creation.

• Through institutions of democratic governance, grassroots private sector voices can provide invaluable guidance on the design and implementation of reforms.