Most Arab countries have embarked on, or are in the process of formulating, medium-term economic reform policies with an important common objective: sustaining a high level of economic growth. This objective reflects policymakers’ increasing recognition that structural changes and financial stability are needed if their economies are to (1) provide sustainable employment opportunities for the un- and underemployed, as well as for the increasing number of nationals entering the labor force; (2) progress further in improving basic social indicators; and (3) benefit from the important changes taking place in the regional and international economies.
This paper discusses the experiences of Jordan, Algeria, and Tunisia with social safety nets. Since the beginning of their developmental efforts, these countries have accorded special attention to social development, adopting strategies that were designed to ameliorate the living standards of the population, particularly low-income groups, and improve the distribution of income. Toward this end, they established elaborate and extensive schemes to provide targeted social services and transfers in cash and kind to these groups and in untargeted services to society at large.
Some of the economic benefits of the economic reform policies carried out by Egypt and several other Arab countries began to emerge a few years ago. However, these policies have also given rise to some adverse social effects, particularly for low-income groups. The comprehensiveness of reform implementation is the ultimate major determinant of economic benefits and transient disadvantages to society, namely, the aggravation of poverty and unemployment. It is even quite likely that inconsistent and slow reform could lead to the loss of expected benefits and to the emergence of negative effects.
Ever since developing countries in the 1980s introduced a set of macroeconomic measures that are collectively referred to as “adjustment,” scholars and politicians have expressed concern about the effect of adjustment on the poor. The concern usually centers on social development, because adjustment policies may adversely affect the availability of affordable health and education services. This concern is understandable. Adjustment policies include a combination of measures designed to reduce government expenditures, to curtail—at least in the short run—private consumption, and—through changes in trade and exchange rate regimes, taxes, and subsidies—to realign consumer prices with (world) market prices. Such measures often result in price increases for food products, drugs and pharmaceuticals, and (imported) school supplies.
Since the early 1980s, in the so-called post-oil boom era, the economies of the Middle East and North Africa region (MENA) have faced major adjustment problems that have substantially slowed the growth of the regional economy as a whole.1 The required adjustments and the constraints on economic growth since the 1980s can best be analyzed in the context of the experience of growth during the oil boom years. The MENA countries achieved high rates of GDP growth and rapid structural change during the 1960s and the 1970s—some of the fastest rates of growth in the world economy. This applied to output growth rates in all the main sectors of the economy in almost all the individual countries in the region as well as the average growth rates for the region as a whole (Karshenas, 1996).
The discussion over the two days of the seminar ecompassed contributions and intervention by practically all the participants. It was lively and wide-ranging, covering specific points and personal perspectives concerning the experience of particular countries, as well as general themes pertaining to ideas, concepts, and aggregates of cross-country experience. Of the former aspect of the discussions, three specific comments on the experiences of Jordan, Algeria, and Egypt are presented separately as part of Chapter 2, under the title of Further Comments on the Experiences of Some Arab Countries. The more general main themes and highlights are presented in the following paragraphs.
Kenneth Arrow, Mr. Dani Rodrik, Lawrence Summers, Joseph Stiglitz, and Paul Gleason
The reform of the international financial architecture, the social agenda, and the economics of transition were the main issues discussed in this year’s Annual Bank Conference on Development Economics (ABCDE), which was held April 28-30 at the World Bank In addition, parallel workshops dealt with a wide range of issues, from health, social insurance, and decentralization to issues of an open economy, financial markets, trade, and foreign aid.
International Monetary Fund. External Relations Dept.
SlNCE the dissolution of the Soviet Union, most of the former member states have retained the ruble as their national currency but have followed independent monetary policies. Such a combination is not sustainable. With mounting disarray in the ruble area, each state must now quickly adopt either a common monetary policy or a separate national currency.
International Monetary Fund. External Relations Dept.
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This paper seeks to clarify what factors contributed to the macroeconomic gains and losses from privatization in transition economies over the past decade. In contrast to the original “Washington Consensus,” which had a tendency to equate change-of-title with privatization, we find that economic performance gains come only from “deep” privatization, that is, when change-of-title reforms occur once key institutional and “agency”-related reforms have exceeded certain threshold levels. We also find that as a result of different initial conditions the economic performance responses of countries to the same policies are different.