Tuesday, October 09, 2007

World Bank and the poorer Arab economies

The Wall Street Journal ($)
[World Bank President] Mr. Zoellick says he plans to focus more on the Arab world and encourage the kinds of reformers he met [as US trade representative] when negotiating free-trade pacts with Oman, Bahrain and Morocco and pushing for stronger trade ties among Egypt, Israel and Jordan. Boosting employment is a huge challenge in the Middle East, where the birth rate is high and economic growth isn't. Mr. Zoellick believes that focusing on labor-intensive export industries, like textiles, could help. His theory: The bank can help "create societal cohesion by giving people the chance to have opportunity and development."

To come up with specifics, Mr. Zoellick has consulted his onetime economics professor at Swarthmore, Howard Pack, now at the University of Pennsylvania's Wharton School. Mr. Pack says trade liberalization won't work unless other changes are made too, including building better ports and roads and making customs systems less corrupt. Education and social mores are critical, too. When Asian nations in the 1970s and 1980s jumped into textiles and manufacturing, they began with workers trained in manufacturing and women willing to work outside the home. That is often not the case in Arab nations.
There's also this from a WSJ interview with Zoellick ($):
If you look at Egypt, one of the challenges will be, can people create jobs and opportunity and have a sense that the government is meeting social needs? [If not], others will try to meet those needs, as you have seen elsewhere in the Arab world.
The U.S. Congress had created something called QIZs, qualified industrial zones, which Jordan used to great effect. What they permitted was duty-free access to the United States for goods produced in these zones. But the country had to work out with Israel a certain percentage of Israeli investment, and that was to be negotiated by the countries.

Egypt had held off, and so one of the last things I did [as U.S. trade representative] in 2004 was to participate in an event in Cairo with [Israel's Ehud] Olmert, who was then the trade minister, and [Rashid Mohamed] Rashid, who was commerce minister, to create a number of these QIZs.

What stuck in my mind is that as I was leaving for the airport, there were reports of two demonstrations. One was of about 300 intellectuals that were protesting Egypt's doing an agreement with Israel. The other was thousands of workers who were protesting that there weren't more QIZs, because they wanted the jobs.

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