From Rabat to Amman

IMF Blog, May 10, 2014

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Authors: Christine Lagarde
Published: May 10, 2014

Context and purpose

Christine Lagarde visited Morocco as the first stop on her Middle East and North Africa trip; Morocco is described as "a dynamic hub for the region" and "a model of stability" despite external challenges including "the economic crisis in Europe" and "political transition in Arab countries."
The Amman regional conference "Building the Future: Jobs, Growth, and Fairness in the Arab World" convenes senior policymakers, civil society representatives, private sector partners, and academics to debate the next phase of economic transformation for Arab countries in transition.

Unemployment and youth

More than 15 million people are currently unemployed in the Middle East and North Africa.
Youth unemployment is disproportionately high, especially among people under 25.
In Morocco:
- Youth unemployment: 19 percent
- Average population unemployment: 9.2 percent
The IMF will discuss unemployment and job creation strategies at the Amman conference.

Strengthening the "middle"

Sustained growth is framed as contingent on a solid macroeconomic foundation that builds confidence, spurs investment, and creates jobs.
Lagarde's prescription to "strengthen the 'middle'":
- Create more vibrant small and medium-sized enterprises.
- Strengthen the middle class.
- Ensure government that is "neither too small nor too large."
Role of the private sector:
- Private sector can play a significant role but requires an improved business environment.
- Needed reforms include smarter regulations, more competition, streamlined conditions for business entry, and adequate financing for small and medium-sized firms.
Elements of a more inclusive economy:

1. The right conditions for more youth and women to enter the job market. 2. Education that matches students’ skills with the needs of modern business. 3. Better functioning labor markets.

Women’s labor force participation and economic gains

Data from Morocco:
- 66 percent of recent graduates are women.
- Only 26 percent of women actively participate in the labor force.
Observed pattern: a low female labor force participation ratio is common in many parts of the region and represents "a huge waste of resources."
One calculation cited: if the gap between male and female labor force participation in the region were only double (rather than currently triple) the average gap in comparable countries, output over a decade would be $1 trillion higher.

Governance, transparency, and corruption

A more inclusive economy also requires better transparency and enhanced governance.
Citizens want clarity on government spending and assurance that banks and companies are financially sound.
Strong governance is essential because corruption undermines economic effectiveness and can erode social cohesion.

Youth perspectives and outreach

The IMF conducted a Facebook campaign in the run-up to the Amman conference to gather Arab youth views on job creation.
Youth inputs emphasized:
- Greater investment in the region.
- More assistance to entrepreneurs.
- The urgency of stamping out corruption.
Meetings with students, including those at the Université Internationale de Casablanca, gave confidence that the new generation of Arab youth is ready to tackle forthcoming challenges.

Source: From Rabat to Amman, Christine Lagarde, May 10, 2014