After the Smoke Clears: Rebuilding North Africa and the Middle East

In the last month it’s been impossible to not get swept up in the euphoria of the Jasmine Revolution and the liberation of Egypt and Tunisia. With the situation taking a grim turn in neighboring Libya and in Yemen, however, the struggle for freedom in North Africa and the Middle East is far from over.

In this short post, I wanted to turn the attention of our overwhelmingly Anglo-American blog toward examining the ongoing problems of economic development in North Africa and the Middle East, and to consider some directions for the future. I have no special expertise in world affairs or economic development, so I welcome your comments and thoughts.

The basic conclusion that I draw from recent data is that although the economic and demographic challenges differ substantially across these countries, basic infrastructure and institutions are an ongoing point of weakness.

By the Numbers

To begin, I assembled some recent data from the CIA World Fact Book on the countries with the most visible protests (most of the estimates below come from the last three years, but a few such as unemployment rates and Gini coefficients are now more than five years out of date).

Indicator

Libya

Egypt

Tunisia

Yemen

Bahrain

population

6,461,454

80,471,869

10,589,025

23,495,361

738,004

percent of population under 14

33%

33%

22.70%

43.90%

25.90%

average life expectancy at birth

77.47

72.4

75.99

63.36

75.4

Infant Mortality Rate Per 1,000

20.87

26.2

21.75

56.77

14.76

female literacy

72%

59.40%

65.30%

30%

83.60%

percent urban

78%

43.40%

67%

31%

89%

GDP Per Capita

$13,800

$6,200

$9,500

$2,600

$40,400

Unemployment Rate

30%

9.70%

14%

35%

15%

Gini Coefficient

NA

34.4

40

37.7

NA

Public Debt (% of GDP)

3.30%

80.50%

49.50%

39.10%

59.20%

Percent Below Poverty

33%

20%

3.80%

45.20%

NA

By virtually any indicator, the poorest country undergoing a revolution is Yemen. Compared to its counterparts, Yemen has a much younger population and with much lower literacy rates (both male and female). Social and health problems abound in Yemen – infant mortality and unemployment are high, and to cope with social problems abuse of the khat plant is high.

The best off country is tiny Bahrain, with an economic profile that puts it somewhere on a par with wealthier countries. GDP per capita exceeds $40,000. The female literacy rate is the highest in the group, and urbanicity is also highest (not surprising considering how condensed the country is). Relative to the rest of the Middle East, Bahrain offers a more diversified economy with a historically strong banking sector. The main grievance among Bahraini protesters thus far has been a lack of democratic rights and frustration with the slow pace of reforms to make government more transparent.

The remaining three countries are somewhat of a mixed bag. Egypt, the largest country, is about in the middle on most economic indicators. Although GDP is higher than countries such as Yemen, Egyptians are more dependent on imported food commodities – a major factor playing into the recent unrest. Educational opportunities have been relatively weak in Egypt, especially in comparison to countries such as Tunisia and Libya.

Ongoing Challenges

The major economic problems in the Middle East thus far have been high youth unemployment, poor quality education that does not prepare children for the labor market, and government inefficiency (for example, programs aimed at delivering subsidies for basic commodities that do not reach the poor). The World Bank notes that in countries like Egypt there are many barriers to entrepreneurship and high taxes on labor and on businesses.

In a policy brief, the World Bank summarized the future challenges in the Middle East and North Africa thus:

“A large segment of the population does not have adequate access to jobs, land, basic services and finance and justice. They may be further marginalized as inflationary pressures grow depending, among other things, on trends in oil and food prices.  Fiscal complications are likely to grow, particularly in Egypt as the Government and public enterprises are grappling with wage and other pressures.  In Tunisia, banks may face stress as second round effects of the slowdown in businesses and investment permeate.”

Prospects for Development and Broad Based Growth

As the World Bank brief points out, the underlying structural problems in North Africa and the Middle East will only get worse without major economic reforms. These countries currently import 30 percent of their food, but are projected to reach 55 percent by 2030. This leaves them particularly susceptible to fluctuations in global food commodity prices. Development projects to improve irrigation and agriculture are one necessary step that is already underway.

Beyond agricultural self-sufficiency, much of the change needed in North Africa or the Middle East is in reforming the labor market and creating a workforce ready to compete in a more diversified and broad based economy. A common criticism of North African and Middle Eastern states is that they prioritize oil extraction to benefit a privileged elite, while ignoring the plight of millions of young people who grow insecure and susceptible to radical ideologies. Replicating that model in the post-conflict setting will be a disaster for global security and for the region writ large. Much can be done to develop training programs in semi-skilled industries, overhaul a stagnant education system, and develop conditional cash programs to provide resources for the human capital development of children (especially girls). Countries like Tunisia have a much firmer foundation for making this transition, including educational institutions, whereas the struggle in Yemen will be achieving universal primary education.

Getting to this point will certainly require external aid, but it will also require a large scale development of government institutions service-delivery that has been ignored in countries like Egypt and Libya. The World Bank’s 2011 World Development Report focused on conflict security and development lays out the argument that the development of state service-delivery institutions is the best way to enhance the stability and legitimacy of post-conflict countries. The success of post-conflict institutions will be important not only to the countries adopting these reforms, but also to the fragile neighboring countries, and to European countries that will be absorbing a large flow of refugees.

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About Brendan Saloner

I am a postdoctoral fellow at the University of Pennsylvania in the Robert Wood Johnson Health and Society Scholars Program. I completed a PhD in health policy at Harvard in 2012. My current research focuses on children's health, public programs, racial/ethnic disparities, and mental health. I am also interested in justice and health care.
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