Dubai, June 15, 2010 - The World Bank is offering a set of practical policy options for governments in the Middle East and North Africa confronted by the acute development challenges of citizens living in poor regions disadvantaged by geography.
A new World Bank report, Poor Places, Thriving People: How the Middle East and North Africa can Rise above Spatial Disparity, was launched today in Dubai, United Arab Emirates. The authors suggest the region can indeed raise living standards in geographic areas that are less economically developed with an informed mix of policy choices.
“The region’s policymakers can address the often intolerable inequities caused by disadvantaged geography without compromising economic efficiency,” says Alex Kremer, principal author of the report and Senior Economist at the World Bank. “We would like to suggest careful local analysis and the application of a mix of policies tailored to the characteristics of each lagging area. The key here is in the mix itself and to avoid broad prescription.”
The report also challenges the assumption that the Middle East and North Africa has to spend huge sums of money on mega-projects and subsidies for poorer areas. Smart solutions for poorer geographic areas are sometimes less obvious, says Kremer. “Take education for girls, for example. It’s critical that this be a key priority for the development of disadvantaged areas. Rural roads can make the difference as can thoughtful linkages between businesses and public institutions.”
Shamshad Akhtar, Vice President for the Middle East and North Africa at the World Bank, was hosted by the Dubai School of Government for the launch. “Spatial disparities impact both developed and developing countries” she said. “There is no single solution to resolving this complex issue, but a rich menu of options and lessons learned… alongside a growing recognition that ‘Good development is good spatial development.”
Spatial disparities – the gap between disadvantaged areas and those that are more developed – may be less important than they seem, the report suggests. It is essential for policymakers to have an objective understanding of the degree to which location affects household welfare: in some countries location matters more than in others. For example in MENA, the spatial component of inequality is biggest in Morocco, followed, in order, by Egypt, Yemen and Syria, but is much less important in Jordan and Djibouti. Nevertheless, in no MENA country does rural-urban inequality account for more than a fifth of total inequality of household expenditure. Overall, MENA’s urban-rural and inter-provincial divides are no bigger than those in other developing regions of the world.
While all lagging areas have development indicators in common, their geographical characteristics set them apart and call for different policy responses. The report proposes three policy packages to address this issue.
First, it asserts that leveling the playing field and investing in people must be a cornerstone of any policy response. MENA’s political and colonial history, characterized by strong central bureaucracies,
centralized economic and fiscal policies, and weak accountability relationships, have resulted in a general neglect of some regions. To create a level playing field for development, the challenge is to address the historical disadvantages of populations on the periphery.
The second policy area urges greater connectivity to build linkages between wealthier areas and those that are economically disadvantaged. MENA’s lagging areas have a proximity advantage because 61 percent of the population lives within 3 hours of a major city. MENA can connect its lagging areas to agglomerating hubs by investing in key sectors such as transport, trade facilitation, and information and communication technologies.
Finally, the report demonstrates that governments can help facilitate cluster development in areas with unrealized potential, not by throwing large amounts of money and infrastructure at the problem, but instead by facilitating local actors and helping to coordinate their initiatives. This includes making space for public private partnership, investing in human capital as well as appropriate infrastructure and understanding what initiatives territories can support rather than trying to force investment with subsidies and tax breaks.
The key message of this report is that while concentration of economic activity in certain areas may be an inevitable part of growth, governments have it in their power to mitigate spatial disparities through careful analysis and policy responses. It is a matter of policy choice and design, not geographic destiny.
What else is the World Bank doing on geographic inequities in the region?
Across the Middle East and North Africa region, the World Bank is already partnering with national efforts to reduce spatial disparities.
For example, the rural development project in Sohag, one of the poorest Governorates of Egypt, supported local investments planned with community involvement. 71 percent of households in the project area reported an improvement in living standards. It is particularly important to note that the project raised the share of women on community planning committees from 3 percent to 33 percent.
Another example is Tunisia’s Northwest Mountainous and Forestry Areas Development project, which aimed to boost rural livelihoods in one of the poorest areas of the country. Between 2003 and 2009, real incomes in the project area rose by 85 percent. The share of communities with access to potable water supplies rose from 69 to 81 percent.
There are many other examples of the World Bank’s involvement in the spatial disparities agenda: from advice to the Saudi Ministry of Municipal and Rural Affairs on options for the spatial allocation of investment budgets; to a briefing to Morocco’s Royal Commission on the international experience of equalization grants and local economic development strategies; and a study of development challenges in Syria’s north-east.