Growth and Stability in the Middle East and North Africa

Achieving Growth and Stability in the
Middle East and North Africa

The Middle East and North Africa (MENA) region covers the enormous area extending from the Atlantic coast of Africa to the borders of Pakistan and Afghanistan in Central Asia and from the Mediterranean littoral to the southern boundaries of the Sahara Desert. The region, defined in this pamphlet to include members of the Arab League, the Islamic Republic of Iran, and Israel, comprises 22 countries with a population of 300 million (Box 1). Its size and population alone make the region economically significant, and this significance is enhanced by its vast human, financial, and natural-resource endowments. It is, moreover, strategically located, enjoys long-established economic and financial links with industrial countries, and boasts a respected tradition of trade. Yet, notwithstanding policy gains in recent years, several MENA countries are yet to exploit fully their economic potential, as stagnant per capita growth and underutilized trade and investment opportunities indicate. Indeed, some countries in the region are failing to benefit significantly from the momentous changes now taking place in the world economy.

Today, the MENA region is at a crossroads in its economic development and must make a choice. One road leads to stagnant growth rates and marginalization of the region in the world economy, while the other leads to integration into the world economy and promises high sustainable growth. This choice is recognized throughout the region. Emphasizing the private sector as the engine of growth, policymakers are confronting the challenge of formulating and implementing policies to improve their economies and allow them to benefit from the changes in the regional and international economy. The stakes are high.

This pamphlet hopes to contribute to the understanding of the economic challenges and opportunities facing the MENA region, subject to three qualifications. First, it attempts to cover a large geographical area comprising countries of differing economic characteristics, experience, and potential. Second, it does not analyze each country individually and, by seeking predominant characteristics and trends and providing a generalized framework for detailed country analyses, indulges in unavoidable generalization. Third, analysis in the pamphlet is hindered by data limitations, as well as by the usual problems associated with cross-country comparisons and aggregation.