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French Version

Thriving Middle East economies still need to touch the poor

With benchmarks for oil rising fast, the Middle East is witnessing an unexpected golden era that shows no sign of ending soon. The region's economies grew 5.6 percent last year and recorded the highest per capita growth rate in a generation.

The boom is not restricted to the oil nations of the region. Egypt's growth rate accelerated to 4 percent last year, and is expected to reach 4.8 percent this year and more than 5 percent for the rest of the decade, which means the country has turned a critical corner. At 5-percent growth, Egypt's economy would be expanding at a rate that comfortably exceeds its population growth of 2 percent. In Jordan's capital city property prices are soaring and the stock market is surging. Real estate and construction are thriving from Morocco to the U.A.E.

The whole region is showing strong macroeconomic growth so how come this does not transpire in a general feeling of popular well-being and hope?

The UN Department of Economic and Social Affairs (DESA) report titled, "The Inequality Predicament" and released on August 25, 2005, sheds light on the reasons. The report notes that "among developed countries, unemployment has generally declined in recent years; however, much of the developing world has experienced high and even rising unemployment." Some of the highest levels of unemployment (12.2 percent) were recorded in the Middle East and North Africa (MENA) region and remained relatively stable during the decade 1993-2003.

To make matters worse, 40 percent of the MENA population is between the ages of 15 and 24 and youth unemployment reached 25 percent in 2003.

This is the perfect background for this feeling of "social malaise" that is a source for discontent and instability. It is worth noting that in a survey conducted in 2004 by the World Economic Forum, the Middle East came out as one of the most pessimistic regions in relation to future security.

The inequalities found in the MENA region are only part of a whole picture. The UN report stressed that in a world of increasing development when societies should be reaping the economic benefits of progress, many are experiencing alarming increases in the discrepancies between rich and poor.

The report highlights that "ignoring inequality in the pursuit of development is perilous. Focusing exclusively on economic growth and income generation as a development strategy is ineffective, as it leads to the accumulation of wealth by a few and deepens the poverty of many; such an approach does not acknowledge the intergenerational transmission of poverty."

Furthermore, the report may sound out of tune with the trend when it warns about "the undue primacy given to free trade to the detriment of the long-term sustainability of economic growth and social development."

This comes as an almost biblical warning to governments in the region that are going head on with privatization and liberalization without creating the necessary macroeconomic structures and social cushions. This warning ought to be also echoed in the ears of World Bank officials who sometime drive indebted countries to dramatic measures without taking into consideration the social cost. Development needs to be balanced if we are to have a secure world.

Another important politico-economic question concerning security the report addresses is global asymmetries whereas "80 percent of the world's GDP belongs to the one billion people living in the developed world; the remaining 20 percent is shared by the five billion people living in developing countries."

It is important to note that, with the exception of China and India, the evolution of income inequality among countries shows a significant increase. The Gini coefficient values rose from 0.47 in 1980 to 0.53 in 2000. This means the disparity between developing countries and the developed ones is dramatically increasing. China and India, on the other hand, are fairing better but still need decades to catch up with the OECD countries.

In the executive summary of the report, Ocampo, under secretary general of DESA, rightly said: "Failure to address this inequality predicament will ensure that social justice and better living conditions for all people remain elusive, and that communities, countries and regions remain vulnerable to social, political and economic upheaval."

khatoum Haidar
The Daily Star

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