The economics of informality in the MENA region!!

A typical MENA country produces one-third of its GDP and employs 67 percent of its labor force informally – World Bank

The informal sector or informal economy is that part of an economy that is not taxed, monitored by any form of government or included in any gross national product (GNP), unlike the formal economy. The recent Arab Awakening is seen by many analysts to partially reflect economic exclusion, in which informality is one of its forms. Workers in the informal sector tend to endure low job security, no social insurance, low income and adverse working conditions. Similarly, firms in this sector, while enjoying the ease of entry and exit and escaping costly formal regulations, are deprived from having access to formal credit, contracts and export opportunities.

The above problem is exacerbated by the observation that the informal sector is relatively large. Thus, in an attempt to understand the trends, causes and dynamics of informality in the MENA region, ERF is holding a workshop on “The economics of informality in the ERF region”, that will convene for one day in Cairo, Egypt. The main objective of the workshop is to provide a platform for discussing the draft papers and their preliminary findings among authors and experts in order to improve the final output.

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What happened to growth after political change?

Leaders matter. Incompetent regimes are more likely to be replaced, Caroline Freund

The Arab spring has had a political whirlpool effect on countries of the Middle East. With nothing happening for quite a long time, to almost all drives for change interchangeably playing active role in the region. After many decades of nothing, a lot of change happened. The ERF organized a session on’ The Political Economy Of Change In The Middle East – What Is Driving Change? during the Seventeenth World Congress, organized by Intentional Economic Association  (IEA) and the Colombia Global Centers, Amman.  The session aims to discuss ideas and directions to think about what is guiding this change, what is currently happening, make some logic of surrounding events and try to figure out the main drives for change in the Middle East, being it geopolitical, social or economic.

In this session Caroline Freund, Peterson Institute presented a paper ‘Change In The Middle East: Similarities And Differences With Global Experiences’ co-authored by Melise Jaud, World Bank. The aim of the paper is to try to understand what to expect based on other countries’ experience that has gone through democratic transitions by examining the causes and economic consequences of political transition.  Freund in her paper examines over 100 transitions in the last half-century with various outcomes: to and from democracy, some partial, and some failed.

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ERF @ The International Economic Association 17th World Congress

The International Economic Association (IEA), with collaboration with the Colombia Global Centers (Amman), is hosting its Seventeenth Annual World Congress at the King Hussein Bin Talal Convention Centre in the Dead Sea, Jordan, starting today up until June 10th. The congress brings together diverse communities of economists, academics and policymakers from both developing and developed countries, working on a wide range of topics with a diversity of approaches.


Seventeenth World Congress- International Economic Association

The 17th World Congress is organized in partnership with the Economic Research Forum, Fung Global Institute, International Development Research Centre, Centre for International Governance Innovation, Institute for New Economic Thinking, African Innovation Foundation, King Abdullah II Fund for Development, and Japan International Cooperation Agency.

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More on labor markets, but this time it is Jordan.

Following the launch of the Egyptian Labor Market Panel Survey (ELMPS), the Economic Research Forum, launches the newest edited volume of “The Jordanian Labor Market in the New Millennium”, edited by Dr. Ragui Assaad and published by Oxford University Press. The book volume provides an in-depth understanding of the Jordanian labor market issues based on the data analysis of the Jordan Labor Market Panel Survey of 2010.

The Jordanian Labor Market in the new Millennium


The ERF plans to organize a seminar in Amman Jordan to disseminate results of the survey on the 5th of June 2014. The seminar will comparatively tackle cross-cutting issues in both the Jordanian and Egyptian Labor markets, including labor market structure and dynamics in the two countries, gender issues in the labor market, a comparison of job accession, separation and mobility, and a comparison of labor supply and the role of the youth bulge.

Follow us on twitter #JLMPS for more live updates from the seminar. Also stay tuned for more stories on the blog capitalizing on distinguished speakers and eminent participants.

You can order the book online here.

‘Labor welfare’ between supply and demand

Are labor issues on the demand or supply side? And do labor market regulations have workers’ “welfare” at heart?

As far as problem solving is concerned, one has to dig deep and “get to the bottom of it”. The eternal dilemma of tackling how labor market regulations impact the labor market structure, performance and outcome has always been in identifying its essence. Inarguably, labor market issues are numerous and, depending on how you look at it, they could arise from both the demand and the supply sides; the supply side being education, training… etc. and the demand side presented in the employment sector.

The papers presented in this workshop  (Labor Market Institutions and Labor Market Performance and Outcomes) particularly focus on the demand side; specifically on the impact of labor market regulations, such as formality, gender employment and social security, on labor market outcomes. The closing session concluded with policy perspectives; engaging a panel chaired by Dr.Ahmed Galal in a discussion of different policy implications that have been brought up by earlier speakers. The panel involved Dr. Ragui Assaad (Humphrey School of Public Affairs), University of Minnesota), Dr. Mustapha Nabli (Former governor, Central Bank of Tunisia) and finally Dr. Nader Kabbani (Director of Research and Policy,Silatech).

Dr. Assaad goes first with concluding remarks on how challenging it can be to identify the real impacts of labor market regulations on the market structure and performance. He argues that clean identification is very hard to come by, as he explains when interviewed, due to the various distortions that could affect the making of regulations (such as economic crises or growth spurts), which makes it harder for economists to identify the real drivers and impacts on the market.

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Labor market institutions, performance and outcomes: Regulations and reforms

The issues of labor market performance in the Arab region is one of the longest standing areas of economic study that ERF has embarked on over the years. The region has gone through a period of political distress that has certainly impacted the labor market dynamics negatively, however the political situation cannot be held solely liable for the pitfalls of the Arab labor market.

Today, ERF is holding a workshop on “Labor Market Institutions and Labor Market Performance and Outcomes”. The workshop provides a platform for discussion of the five papers that have resulted from the latest call for proposals on this particular theme. The papers tackle a number of important issues in the ERF region’s labor markets; including informality, job finding rates, social insurance and gender employment.

How constraining are Labor market regulations on labor market outcomes?

Following Dr. Ahmed Galal’s lead on the opening remarks, Dr. Ragui Assaad kick starts the workshop discussions, arguing how the labor market is largely understudied in the region, which he mainly blames on the lack of supporting data. He also highlights the important effect of labor market regulations that shape the performance as well as outcomes of the labor market. He also raises the issue of dynamism in MENA’s labor markets, especially in informal SMEs.

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Lessons from Arab Countries in Transition

Final day policy panel discuss lessons from the experiences of a region in transition

Final day policy panel discuss lessons from the experiences of a region in transition

Chaired by Noha El-Mikawy (Ford Foundation and ERF), the third and final plenary session of the ERF Conference focused on lessons emerging from the experiences of Arab countries in transition. Four speakers, Gouda Abdel-Khalek, George Corm, Paul Salem and Zafiris Tzannatos addressed key issues surrounding the concept of social justice, each offering penetrating insights and unique perspectives on prevalent economic and social conditions in the Arab world and wider MENA region.

Social justice: the cornerstone of equitable development

Gouda Abdel-Khalek (Cairo University), presented on Social Justice: lessons of experience for Egypt. Seeking to elaborate on the meaning behind ‘bread, freedom and social justice’ – a slogan now widely recognised as articulating the desire for change in many Arab countries – Abdel-Khalek’s message was that building foundations for social justice in times of political turbulence is a tricky task; and one beset with challenges. He cited the steady increase in wage related protests before and after 2012 as evidence of the link between social unrest and the poorly performing Egyptian economy.

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