From Privilege to Competition

Book excerpt: 'From Privilege to Competition: Unlocking Private-Led Growth in the Middle East and North Africa' sheds new light on the difficult quest for stronger and more diversified growth in a region of unquestionable potential. It underlines the need to strengthen reforms in many areas specifically, by reducing policy uncertainty and improving credit and real estate markets. It also highlights other important issues that restrain the credibility and impact of reforms in many parts of the region: conflicts of interest between politicians and businesses, an investment climate that favors a few privileged firms, and a dominant private sector that often opposes reforms. The book recommends that countries in the Middle East and North Africa (MENA) engage in more credible reform agendas by improving the implementation of policies in a manner that will reduce discretion and privileges. This renewed commitment to stronger growth would entail several developments. First, governments will need to reduce opportunities for rent-seeking and foster competition. Second, they will need to work to reform institutions: private sector development policies will need to be systematically anchored in elements of institutional and public sector reforms in order to reduce discretion and opacity and improve the quality of services to firms. Third, they will need to mobilize all stakeholders, including larger representations from the private sector, around dedicated long-term growth strategies. Short of such a fundamental shift in the way private sector policies are formulated and implemented, investor expectations that governments are committed to reform will be limited. It will take political will and time to support sustained reforms that credibly convince investors and the public that changes are real, deep, and set to last. MENA countries are endowed with strong human capital, good infrastructure, immense resources, and a great deal of untapped creativity and entrepreneurship. The economic and social payoff of embarking on a more ambitious private-led growth agenda could thus be immense for all.