Regional Focus: Middle East and North Africa

 

Over the last several years, the pace of political and economic reforms in the Middle East and North Africa (MENA) has been sluggish at best and often wrought with setbacks. Ongoing conflicts in the region have hampered the hope for progress, but the reasons why MENA lags behind in democratic and market-oriented reforms go beyond the immediate instability. Rather, it is the very structure of MENA polities and economies – based on the state domination over the economy and rentier relations between the citizenry and the rulers – that hinders successful reforms.

 

While democratization in the region remains stagnant, economy, on the face of it at least, appears vibrant. 2007 marked the fifth year in a row with average growth in MENA at above 5 percent. But upon closer examination it is obvious that the bulk of this growth is derived from oil and fueled by the global price boom. The obsolete fundamentals of the region’s economies still have to be reformed in order to meet daunting socioeconomic challenges. As new cohorts of young graduates are entering the workforce, millions of new jobs will be needed. Meanwhile, neither the region’s public sectors (traditional employer of first and last resort) nor its underdeveloped private sectors are currently able to absorb all the new job seekers.

 

In order to meet the economic expectations of its populations and keep up with an increasingly competitive global environment, MENA must focus on in-depth structural and institutional reforms that would make both its political and economic system better governed. Only more transparent and dynamic markets can help MENA address its current youth employment challenge.