Deon Filmer, Roberta Gatti, Halsey Rogers, Mr. Nikola Spatafora, and Drilona Emrullahu
We discuss existing shortfalls and inequalities in the accumulation of human capital—knowledge, skills, and health. We analyze their immediate and systemic causes, and assess the scope for public intervention. The broad policy goals should be to improve: the quality, and not just the quantity, of education and health care; outcomes for disadvantaged groups; and lifelong outcomes. The means to achieve these goals, while maximizing value for money, include: focusing on results rather than just inputs; moving from piecemeal interventions to systemic reform; and adopting a “whole-of-society” approach. Reforms must be underpinned by a robust evidence base.
Mr. Benedicte Baduel, Carolin Geginat, and Ms. Gaelle Pierre
This paper examines the extent to which firms in selected MENA countries reported being constrained by the business environment around the time of the Arab Spring and the extent to which these constraints affected their employment performance. The results suggest that small firms in MENA faced more structural constraints than similar firms in other regions. We also find that MENA firms’ weaker job creation can be explained in great part by the macroeconomic environment and structural constraints. Low GDP growth, falling external competitiveness, corruption, lack of access to finance and poor access to electricity are found to explain a significant part of the lack of employment growth in MENA firms compared to their peers.
Khalid ElFayoumi, Anta Ndoye, Miss Sanaa Nadeem, and Gregory Auclair
Institutional and market frictions impose costs on the reallocation of labor from low to high
productivity sectors, leading to suboptimal allocations and a loss in aggregate labor productivity.
Using cross-country sector-level data, we use a dynamic panel error correction model to compute
the speed of sectoral labor adjustment, as well as the contribution of structural reforms in
governance, labor and product markets, trade and openness, and the financial sector to lowering
the costs of labor reallocation. We find that, on average, sectoral employment shares converge
towards equilibrium allocations, closing about 13.7 percent of labor productivity gaps each year;
this speed of labor adjustment varies across sectors and income groups. On structural reforms, we
find a significant association between more efficient labor reallocation and financial market
liberalization, less bureaucracy, strong judicial and regulatory environment, trade liberalization,
better education and more flexible labor and product markets.
This paper studies the main determinants of total factor productivity (TFP) growth using principal component analysis and a dynamic panel data model and, through a case study, explores key areas where accelerated reforms in the Maghreb countries would boost TFP gains. The results reveal that reforms targeted at attracting foreign direct investment and rationalizing government size, shifting resources from low-productivity sectors to higher ones, and encouraging women to enter the work force, could accelerate TFP gains. Equally important are reforms aimed at strengthening human capital, increasing the volume of trade, and improving the business environment.