managing the transition to the long run in mena
TRANSCRIPT
Shanta DevarajanWorld Bank
www.brookings.edu/futuredevelopment
Managing the transition to the long run in MENA
The payoffs: (1) Peace dividend
Pre-conflict During Post-conflictAfghanistan 1978-2001 2.6 -6.5 10.4
Angola 1975-2002 3.4 -1.3 11.8Azerbaijan 1991-1994 -2.2 -17.8 9.4Bosnia and Herzegovina 1992-1995
-11.9 3.6 10.5
Cambodia 1970-1991 … -4.0 4.8Chad 1965-1990 … -0.3 2.3Congo-Dem. Rep 1996-2001 -4.0 -5.2 2.6Croatia 1991-1993 … -12.9 4.5El Salvador 1979-1991 2.0 -2.5 1.9Ethiopia 1974-1991 1.1 -0.9 2.3Georgia 1991-1993 2.4 -26.4 7.7Guatemala 1965-1995 … 0.9 0.6Lebanon 1975-1990 0.0 -5.0 3.7Liberia 1989-2003 -2.0 -9.3 2.8Mozambique 1976-1992 1.6 -1.4 5.3Namibia 1973-1989 -2.8 -1.0 1.6Rwanda 1990-1994 0.7 -8.4 4.0Solomon Islands 1998-2003 0.3 -5.7 3.2Sierra Leone 1991-2001 -0.1 -7.3 8.0Tajikistan 1992-1997 -2.3 -15.2 7.1Uganda 1979-1991 -1.0 -2.0 2.9
Average annual per-capita GDP growth rates
The payoffs: (2) The democracy dividend
-10
-5
0
5
10
mea
n po
lity
inde
x
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
year
MENA High income countries Other developing countries
MENA is the least democratic region in the world
Source: Mean Polity index (1960-2015)
The payoffs: (2) The democracy dividend (cont’d)
-4-3-2-10123456789
Gro
wth
pro
ject
ion
(%)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Year
Counterfactual growth pathGrowth path with a permanent transition to democracyGrowth path with a permanent transition to an improved economic rights
Simulated growth effects of a permanent transition to democracy or economic rights
Source: Kraay and Kindriebeogo (2015)
The payoffs: (3) Alignment between economic growth and life satisfaction
5 6 7 8 9 10 11 123
3.5
4
4.5
5
5.5
6
6.5
7
7.5
8
4.3198566 4.2060916
5.3774806
ARE
6.2755278
4.3989497
7.35152277.2620213
4.5372543
3.6775597
6.985035
3.66713953.941987
4.9978703
3.9122764
BHR
4.8159957
5.517235.7223925
6.8429857
4.5009335
3.5678925
7.54132397.5245206
6.2897902
4.6542875
4.1971815
4.5302475
3.8197922
6.2826173
3.6440487
7.246895
6.53553216.2496178
6.5954895
DJI
7.8084628
5.0039079
DZA
5.7185737
EGY
6.5578546
5.2944418
7.5320721
6.69743946.9741761
4.0238521
4.5905699
5.939169
6.3853743
5.3928404
5.7729325.518877
3.8058874
4.8096979
5.2529755
4.8874383
7.339747
IRNIRQ
6.8882842
7.3244114
6.4892547
JOR
5.9267633
5.5927626
4.1336606
4.934357
4.2389185
5.71641555.5264211
6.6919105
5.044099 LBN
4.2087007
LBY
4.2056968
5.2920001
7.0508527
4.90669MAR
5.5489595
4.6400789
6.8647059
4.3046233
3.9511867
5.9599782
5.1265905
4.53963654.6535832 4.561386
5.1482395
5.5895283
4.2010991
4.8925419
5.3805242
7.56644477.6322876
4.5695928
7.3022673
5.0022452
7.0952146
5.4206067
4.8039147
5.8479214
5.3020577
5.6621651
QAT
5.13851775.3874204
4.195772
SAU
4.44108184.4633568
6.5075245
3.5649187
6.2583358
4.4205556
5.9977307
7.4262314
SYR
4.0049282
5.7726056
4.6751947
6.56771336.6964439
TUN 5.2741429
3.6692758
4.457829
5.1330815
6.004774
7.2007158
5.2222955
6.9726809
5.3610401
WBGYEM
5.0720735
3.9838486
4.994297
3.9705735
Log GDP per Capita (2005 US dollars)
Average Life Evaluation
Average income and subjective wellbeing by country (2008-2011)
Source: Arampatzi et al. (2015) based on World Bank data and World Database of Happiness
The payoffs: (3) Alignment between economic growth and life satisfaction
-3 -1 1 3 5 7 9 11 13 15
-1.5
-1
-0.5
0
0.5
1
1.5
0.70753330.634685
ARE
0.12814190.07850040.1093590.2238245
-0.4087764
0.2340697
0.53957210.3765695
-0.2312896-0.1317266
0.406634
0.20056
-1.186347
0.2322979
0.5728043
0.0922413
0.7031848
0.3831708
0.18858860.1485877
-0.287053
0.1049812
-0.248419-0.3529466
0.8138601
EGY
-0.9645231
-0.2791849-0.2954917
0.0458076
0.4267287
0.071232
-0.1667513
0.3883196
0.1316475
0.4696119
-0.2253324
0.0118426
-0.4688008
0.5103213
-0.3589816
0.11314310.185499
-0.4995456
JOR
-0.4590646
0.0383382
0.24987250.3550119
0.5723276
0.7838468
0.0726952
0.7226039
LBN-0.3677055
-0.8886181
MAR
0.4876653
0.2217307
-0.3133966 -0.2517708
0.2587152
-0.4314352
0.3640644
0.0505299
1.226541
0.0378966
-0.2169195-0.0812577
0.5614755
1.193479
0.8019398
0.27156840.1931209
-0.5325255
1.111092
-0.1394824
0.4210306
SAU
-0.2146932
0.068699
0.505771
1.038982
-0.2890795
0.27129070.1197035
0.30807050.3312704
-0.2324628
0.7716134
-0.4376412
0.4592983
0.2536072 0.2761428
-0.0181775-0.13698
0.3088334
0.0021209WBGYEM
-0.4315582
0.8553011
Average Annual GDP Growth 2005-2010
Change in Life Evaluation 2005-2010
Source: Arampatzi et al. (2015) based on World Bank data and World Database of Happiness
Realizing the payoffs: (1) Recall why countries need a transition• Broken social contract
Latin America & Car-ibbean
Sub-Saharan Africa Europe & Central Asia Middle East & North Africa
MENA Female MENA Youth0
10
20
30
6.27.7
9.611.2
21.0
30.0Unemployment rate (latest available), percent
Realizing the payoffs: (1) Recall why countries need a transition• Broken social contract (cont’d)
0
10
20
30
40
50
60
Source: TIMSS 2011.
Realizing the payoffs: (1) Recall why countries need a transition
• Violence and conflict
Realizing the payoffs: (1) Recall why countries need a transition
• Violence and conflict: Alienation
Realizing the payoffs: (1) Recall why countries need a transition
Violence and conflict: Foreign military interventions
Realizing the payoffs: (2) Designing and managing the transition
• « Transition » countries (Egypt, Tunisia, Morocco, Jordan, Lebanon, Djibouti)
• Post-conflict countries (Iraq, Syria, Libya, Yemen)
• Other oil exporters (GCC, Iran, Algeria)
Realizing the payoffs: (2) Designing and managing the transition• « Transition » countries (Egypt, Tunisia, Morocco, Jordan, Lebanon,
Djibouti)
• New social contract:
• State provides
• Level playing field for businesses
• Accountability in service delivery
• Cash transfers
• Citizens
• Pay market prices for private goods
• Participate actively in economy and services
Decentralization as part of the solution?
MENA excluding UAE
SSA
LAC
EAP
ECA
OECD
0 2 4 6 8 10 12 14 16 18 20
Sub-national expenditures (% of total expenditures)
Realizing the payoffs: (2) Designing and managing the transition
• Post-conflict countries (Iraq, Syria, Libya, Yemen)
• Massive inflow of resources for reconstruction and recovery
<<Beware role of foreign intervention>>
• New social contract, not old
• Decentralization may exacerbate tensions
• Distribute resource revenues directly to citizens
Realizing the payoffs: (2) Designing and managing the transition• Other oil exporters (GCC, Iran, Algeria)
• Suffer from same problems as Arab Spring and conflict countries (youth unemployment, poor quality services, etc.)
• Move to more efficient distribution of oil revenues
• Civil service reform
• Subsidy reform
• Strengthen citizens’ ability to hold government to account
• Taxation
• Transparency