“Replacing generalized price subsidies with targeted support would mean that those most in need could experience an immediate and visible improvement.”
Ensuring a more inclusive role for the private sector will be key for job creation. The private sector generates more than 90 percent of jobs in developing economies. As the public sector works on delivering an enabling environment, private enterprise should take on the responsibility of increasing investment, productivity, and competitiveness while training the workforce to take advantage of a changing technological world. Hence, the private sector needs to be in the driver’s seat for expanding economic activity, supported by a strong and efficient public sector. In turn, governments’ role in developing institutions, correcting market failures, and providing public goods is key. Educational improvements will be essential to ensure the formalization of the labor force—improving people’s income security and access to social protections—and the development of adequate skills for people to perform.
In the private sector, removing legal barriers and discriminatory practices would help bolster female labor force participation. Currently, the region’s state-owned enterprises are sprinkled across the economic spectrum, ranging from healthcare, textiles, foodstuffs, and furniture manufacturing to communications and electricity production. This outsize presence of the public sector in commercial activities and as an employer of first resort creates inefficiencies and distortions, weighing heavily on overall productivity growth. Stronger economic governance and decisive anti-corruption policies are key to fostering faster and more inclusive growth while ensuring that everyone has a voice. Political and economic participation safeguards accountability in the use of public resources and the provision of services. It also strengthens social cohesion and trust and ensures that the benefits of growth can be spread across society. As reforms progress, it will be important that governments provide supporting evidence for decisions and outcomes and hold themselves accountable. Transparent institutions with strong accountability ensure that the rules of the game are fair and clear.
Mohamed Robin Rashed Elalami