Growth or equity: which comes first?

In any discussion of development, one dilemma invariably comes to the forefront: which should come first, growth or equity? Nowhere is this debate more pressing than in transitioning Arab countries, where a new social contract is in the making. It is a dilemma that mDebateust be resolved if the lives of these Arab citizens are to see any real improvement.

The debate took place on December 10th, 2014 in Cairo at 4.00 pm; and organized in collaboration with IDRC. To advance this public policy debate, two teams of debaters  argued for and against the motion: The Economics of Growth is a More Urgent Priority than the Politics of Equity.

Our four debaters are Shantayanan DevarajanWorld Bank-, Hoda SelimEconomic Research Forum-,  Ahmed GalalEconomic Research Forum- and Ravi KanburCornell University-; it was moderated by Khaled Ezzelarab -Aswat Masreya-.results_debate

The debate was preceded by brief remarks by Bruce Currie-Alder, Regional Director of the IDRC office in Cairo.

The crowd voted at the end of the debate; 53.9% were convinced that equity is more important than growth; while 33.3% voted for growth over equity.

You can now watch the debate online

The Evolution of Thinking About Development – Part 2

This interview was published in the ERF “Forum“, Vol. 21 No.2 Autumn 2014

ERF keeping in tune with changing economic thought on development strategies and policies has interviewed Ravi Kanbur to solicit his views at this critical juncture in the history of the Arab World.

During the “market versus state” debate, civil societies have taken on an increasing role in providing public services. Can civil societies replace the role of the state in implementing development strategies?
As I noted above, a major shift in development thinking is indeed the broadening of the conventional market versus state disRavi_kanburcourse to take into account the role of civil society. This is important and crucial, but I do not think civil society is a substitute for the state. Sure, there is some implementation that can be better done by civil society organizations and, very importantly, they have a central role to play in making the voices of the poor and vulnerable heard, but there are some things that only the state can and should do. Let me illustrate this with what is known in the literature as “the Bangladesh paradox”, which is that despite having very low ratings for its state institutions from standard sources such a Transparency International, Bangladesh performs very well on social indicators such as girls schooling. Some analysts put this down to the successful and vibrant Bangladeshi civil society, of which the prominent Grameen Bank is only one example.

There is no doubting the vitality of civil society in Bangladesh, but we must also look at the enabling environment of laws, regulation and infrastructure which complements their functioning. There is of course huge room for improvement on the part of the state, but I think we would do well to look at state and civil society as partners rather than substitutes.

Continue reading

The Evolution of Thinking About Development – Part 1

This interview was published in the ERF “Forum“, Vol. 21 No.2 Autumn 2014

ERF keeping in tune with changing economic thought on development strategies and policies has interviewed Ravi Kanbur to solicit his views at this critical juncture in the history of the Arab World.

Ravi Kanbur researches and teaches in development economics, public economics and economic theory. He is well known for his role in policy analysis and engagement in international development. He is also ranked in the top 0.5% of academic economists in the world.Ravi_kanbur

What in your opinion are the main shifts in thinking about development economics over the past century or so?
There are great constants and great shifts, in equal measure. The single great constant is the ever present tension and debate between “market” and “state” oriented development strategies. We may think that these debates are new, but they were present at the dawn of development economics as a separate sub-discipline in the 1940s and 1950s.

Continue reading

Monetary and Fiscal Institutions in Resource-Rich Arab Economies

This blog is written by Dr. Hoda Selim, Economic Research Forum

The Arab region discovered oil more than 70 years ago. Today, it holds close to half of global oil reserves and a quarter of natural gas reserves. It controls almost a third of oil production and 14 percent of that of natural gas. The hydrocarbon sector dominates these economies, accounting on average for 50 percent of GDP and fuel exports represent around three-quarters of merchandise exports. Moreover, these countries derive at least two-thirds of their fiscal revenues from hydrocarbons. Despite this tremendous wealth, resource-rich countries Arab countries have neither achieved economic prosperity nor became developed countries.Monetary & Fiscal Institutions Workshop

Recent research by the Economic Research Forum (ERF) has shown that weak institutions in the Arab World are the root cause of the resource curse, and that mismanagement of resources os primarily shaped by the prevailing political institutions which predated resource discovery. Over time, the interaction between these factors became intertwined, preventing these countries from embarking on a sustainable development path.

In an attempt to understand the role of institutions in shaping overall performance, the ERF has initiated new research work on macroeconomic institutions, both monetary and fiscal, and macroeconomic outcomes. The first research project is on “Institutional Requirements for Optimal Monetary Policy in the Resource-Dependent Arab Economies.” Led by Bassem Kamar, this work aims to assess the impact of monetary policy institutions including central bank independence and the interactions between monetary and fiscal policies on performance in resource-dependent economies.

Continue reading

Shifting political economies of grievances: the generation of state cutbacks comes of age

This blog is written by Dr. Nisreen Salti, American University in Beirut and Melani Cammett, Brown University

The uprisings that spread across the Arab countries, leading to the overthrow of Ben Ali in Tunisia and Mubarak in Egypt and putting incumbent rulers on guard across the region, are widely depicted as youth uprisings. Images of the crowds of protesters often show a sea of young faces. But young people across the world tend to take part in demonstrations and protests at a higher rate than their elders simply because they have more leisure time and fewer responsibilities to work and family, among other factors. To what extent, then, were the Arab uprisings truly youth movements, reflecting youth-specific grievances? Do the youth in Tunisia and Egypt show higher levels of dissatisfaction with government performance than older cohorts? Or are the grievances of the youth similar to those of other generations?

Another common reading of the uprisings characterizes them as movements of the disenchanted middle class. This view, advanced by the likes oNisreen Saltif Diwan, Gelvin, and Dai, holds that a large middle class emerged in the decades after independence, due primarily to state employment, important strides in education, and large-scale improvements in the provision of healthcare. This class is also thought to bear the brunt of the radical state spending cuts, the scaling back of public employment of the last few decades, and the failure of these economies to provide sufficient high quality jobs to enable social advancement. Is the middle class more disenchanted than other socio-economic classes? And is it most aggrieved about issues related to education and job markets, which are more closely linked with upward mobility than other sectors?

Continue reading

Does mobilization relieve individuals’ sense of grievance or is it exacerbating?

From the corners of Cairo to the alleyways of Tunisia to the squares of Syria to the neighborhoods of Libya; tired frustrated hopeless Arabs are protesting with powerfully worded signs and slogans, utilizing social media, and taking a stand and a mass movement, that their voices be heard. Thus, what do we mean by a mass movement? Well, it is simply, a durable mobilization of a large number of active participants around a common policy or political purpose.   A movement is more than a protestor demonstration, in which participants may turn out once but are not durably mobilized around a common political goal.

Providing the impetus to mobilize!

The combination of positive and negative emotions helps energize action through their contrast. In this case, hope is considered as the positive pole of mobilization, while the negative pole is often the frustration of not having an impact or not being heard by the government.

During the first day of the ERF workshop “The Pulse of the Arab Streets”, a paper was presented by Evann SmithHarvard University -and Ashley FabrizioStanford University- co-authored with Stephen KosackUniversity of Washington- on “The Effects of Mass Mobilization on Perceptions of Well-Being in the Middle East”. They explain the mobilizations around the Arab Spring, examining the relationship between mobilization and citizens’ perceptions of their own economic well-being. They also focus on movements’ emergence, existence, scope, and primary tactics.

Continue reading

How much was education paid in Arab labor markets in 2011?

This blog is written by Dr. Zafiris Tzannatos, Senior Consultant for Strategy and Policy

Not much! An extra year of education increases the wage of an otherwise average worker across the globe by 10 percent but in the Arab countries by only 5 percent.

This difference has been known for the last couple of decades but has been based on estimates for only a few Arab countries that have micro Dr.Tzannatosdata, typically Labor Force Surveys. These countries usually included Egypt, Jordan, Morocco, Tunisia and Yemen and, spasmodically, Djibouti, Iraq, Lebanon, Mauritania and Palestine.   But what about the other Arab countries?   And rather than comparing countries at different points in time (for example, Djibouti in 1996 vis-à-vis Palestine in 2008), where did Arab countries stood at the time of the recent Uprisings?

We estimate the impact of education on wages across all 22 Arab countries based on income information included in Gallup surveys. This impact, known as “rate of return to education”, was estimated effectively for 2010-11. Though it is common to refer to the average (male and female) rate of return to education in a particular country, we consider this to produce a freak statistic and prefer to report it separately for women and men. First, the valuation of women’s work is (often strikingly) different than that of men’s – and not only in the Arab world. Second, women’s share in total employment varies significantly across different countries. In other words, what is the average price of 100 oranges and 50 apples?

Continue reading