The Economic system in the MENA region and its possible contribution to the Arab Spring.

The Economic system in the MENA region and its

possible contribution to the Arab Spring

Mohamed Bouazizi – Tunisian street vendor

From Mohamed Bouazizi....

….to Economics in North Africa

Before the Spring

• Status quo (2010):- Economic elites obtain most of privatized assets thanks to political connections - Firms are not treated uniformly Corruption & tax rates - Lack of jobs in private sector High unemployment rates for young people- Old businessmen Youth in majority- Spike in global food prices

Before the Spring

Political concerns about voice/human rights+

Lack of jobs and crony capitalism+

Catalyst: Mohamed Bouazizi

ARAB SPRING

Entrepreneurs as Drivers of Change

Entrepreneurs as Drivers of Change

• Entrepreneurs don’t participate in the protests in an open and collective manner

• ONLY: labor unions, youth movements, leftish/islamist movements, bloggers

• Reasons for not participating: 1. Existing business organizations are controlled by incumbents and lack independence from the regimes in place2. Associations for SMEs simply do not exist 3. Are sensitive to retaliation by the regimes in place can deprive them of their livelihood

Entrepreneurs as Drivers of Change

Only way to participate in protests as civilians

Other ways of bringing political changes?

SMEs as contributor to political change

Entrepreneurs as Drivers of Change

• Promoting social mobility by expanding middle class• Adding fresh blood to entrepreneur elites• Decentralize economic power away from big

entrepreneurs supporting the regime• Advocate for institutional reforms that weaken the

economics elite’s capacitiy to capture the benefits of economic reforms

• Implementing more transparent/democratic procedures within business associations can spill over into civil society/political sector

Linkage between Entrepreneurship and other Drivers of Change

Linkage between Entrepreneurship and other Drivers of Change

• Linked with issue of MIGRATION• Can influence entrepreneurship by:

- BRAIN DRAIN:Deprive emigrant countries of their more

entrepreneurial/creative individuals- CIRCULAR MIGRATION:

Co-development, mainly via monetary remittances tend to finance only consumption, housing

improvement, health care etc. don’t foster entrepreneurship

- BRAIN CIRCULATION:Mobility of competence/skills through network of

knowledge/innovation

Linkage between Entrepreneurship and other Drivers of Change

• Morocco, Egypt, Lebanon:- very significant flows of monetary remittances - but seldom corridor of goods, information, knowledge, services etc

MONEY

INFORMATION

HOMEFOREIGN COUNTRY

Linkage between Entrepreneurship and other Drivers of Change

• Small attempts for BRAIN CIRCULATION model:

offers new business opportunities and changes way businesses are managed

opportunity to develop a new segment of middle-class professionals/entrepreneurs

Final Remarks: Towards more comprehensive EU, US, and Transatlantic

Perspectives on Entrepreneurship in North Africa

Final Remarks

What we have seen so far:

Small/very small (often individual/family) companies are a potential driver for:

ECONOMIC, SOCIAL, POLITICAL CHANGE

Final Remarks

What have the EU/USA done so far topromote North African entrepreneurships and

SMEs?

Final Remarks

1. • Seldom support of small

entrepreneurs/microentrepreneurs• Rarely considered, consulted or even informed EU/USA have to start to include them in their bilateral negotiations with governments Inclusion of all actors, e.g. traditional/small farmers, consumer associations, representatives of civil society (including religiously ones)

Final Remarks

2. • Troubled relationship between business &

democratization• Business representatives are seldom invited to

civil society meetings, are not considered capable of organizing themselves include the business sector in democracy process

Final Remarks

3.• Euro-Mediterranean relations mainly focus on

governments/big policy designs exclusion of SMEsSolution:

• Support initiatives that promote SMEs• Measures directly targeting SMEs• Improve economic/legal institutions/infrastructures

that benefit micro/small businesses

Final Remarks

4.• Horizontal policy reform EU/USA should consider offering a consistent package of incentives, including financial assistance & better access to THEIR markets for NA goods, services, workers

Final Remarks

Possibilities of economic change through:- Young population pave the way for more individualistic approaches- Migration building of entrepreneurial bridges- Effective economic integration with EU/USA process of political/economic liberalization

Final Remarks

Key objectives for the future:

• JOB CREATION • ECONOMIC GROWTH• SOCIAL STABILITY

• DECENTRALIZATION OF ECONOMIC POWER STRUCTURES