Supporting Private Sector Development in the Middle East and North Africa

Abstract

Until the late 1970s gross domestic product (GDP) growth in the Middle East and North Africa exceeded population growth, resulting in rising per capita incomes throughout the region. By 1980, however, population growth exceeded increases in GDP in all the countries in the region except Morocco and Tunisia. For countries outside the Gulf Cooperation Council (GCC), recent growth rates have been insufficient to absorb the growing labor force, resulting in unemployment.¹

The public sector dominates most Middle Eastern and North African economies. Extensive government involvement in investment, enterprises, finance, and infrastructure provision constrains economic development, lowers productivity, and discourages investment — domestic and foreign. To recover growth, governments in the region must quickly adopt policies that modernize the financial sector, privatize the provision of infrastructure services, and restructure the regulations, laws, and fiscal incentives that govern economic activity.