Going beyond Doing Business to Foster Job Creation in Arab Countries

In this policy brief, MEI Research Fellow Jamal Haidar and MEI Visiting Scholar Hedi Larbi emphasize the importance of Arab policy makers implementing reforms that contribute to creating highly-needed productive jobs. Improving the business environment to attract job-creating investments is an important policy option to achieve this. The Doing Business rank-improvement approach provides a useful tool to benchmark countries along several business indicators and identify areas where relevant reforms are needed. However, this approach is not sufficient for Arab countries where the reform agenda of the business environment needs to be wide-ranging. Arab policy makers would gain from adopting a reform approach that goes beyond the Doing Business indicators. The challenge lies in designing and implementing a comprehensive policy reform framework that substantially improves relevant institutions. International benchmarks may be useful for getting an idea of achievable performance in a particular area. Nevertheless, the key is to improve on the areas that matter, regardless of whether existing global indicators cover them or not.

In a nutshell:

• Creating enough jobs is a key development challenge for Arab countries.
• To address this challenge, many Arab policy makers sought to enhance the positions of their countries in the World Bank’s Doing Business ranking.
• A better Doing Business ranking is thought to attract job-creating investments. This policy brief argues that such a policy goal is not sufficient to foster investment and job creation in Arab countries.
• Arab policy makers need to embrace a broader approach, which include structural reforms, to reduce business-government transaction costs, enhance competitiveness and increase investment returns.

Download the full policy brief here.