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Private Sector and Enterprise Development

Fostering Growth in the Middle East and North Africa

Lois Stevenson

This important and well-researched book examines the challenges to private sector growth in twelve Middle East and North African (MENA) countries, assessing comparative performance against a number of indicators and focussing on the special role of SMEs and entrepreneurial activity.
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Chapter 6: Policy, Research and Capacity Issues

Lois Stevenson


The previous chapters of this book have laid out the major socio-economic challenges faced by the MENA-12 countries, indicating that the slow development and growth of the private sector is one of the key strategic deficiencies. The critical policy question is how to foster the conditions for a more substantial and vibrant private sector. MENA governments have undertaken many structural reforms to improve their macro-economic frameworks since the end of the 1990s, but these have not evidently been sufficient to foster strong private sector-led investment and meet employment demands (World Bank 2006d). Efforts to engage in structural reforms of the micro-economic environment affecting enterprises have proven to be much slower and more difficult to implement (Noland and Pack 2007) although governments in each of the MENA-12 countries have expressed commitment to such reforms and made some progress. The private sector response to policy reforms has been more robust in resource-poor countries, such as Jordan, Morocco, Tunisia, Egypt and Turkey, than in the resource-rich countries of Algeria and Syria, although less responsive in MENA countries than in higher-growth countries where similar reforms have been pursued (World Bank 2009c). This led to the World Bank’s conclusion that the relatively low level of private investment and dynamism in MENA countries is more due to greater policy uncertainty and the unequal, discretionary and preferential implementation of policies than to insufficient reforms (World Bank 2009c). In other words the lack of impact has had less to do with the reforms than with how they are...

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