The Wall Street Journal had an article today on a little-known narcotic plant called Qat. It is popular in Yemen, Ethiopia, and a few other places, but most authorities don't look too kindly on the use of the plant. Qat causes a mild narcotic euphoria - think way too many espressos. Erowid, a directory of information about psychoactive substances, describes the experience of chewing the leaves of Qat like this:The experience of khat chewing is often compared to other stimulants, similar to a strong dose of caffeine or a low dose of cocaine. Commonly reported effects include an increase in energy and alertness, increased physical endurance, mild euphoria, increased talkativeness, and cheerful mood. Physiological effects include increased heart rate, blood pressure, and wakefulness.Yemeni...
What would you do if you were running a country that is having to balance the benefits of high energy prices and the costs of high food prices? Ask Saudi Arabia, which is now gearing up its efforts to buy more and more agricultural land in other countries in order to reduce the pressure on food supplies.
The approach is somewhat interesting, as the investments go into securing productive capacities in other countries, rather than strictly relying on imports or supporting [in many instances] less efficient domestic producers. One of the reasons behind this move is that
Saudi Arabia has reduced its agricultural production with the objective of economizing water and has been seeking land in other countries on which to grow crops.
More from WSJ here. I wonder what will be the response to...
The Iraqi government is growing in size, steadily moving towards pre-2003 levels, according to this NY Times piece by Campbell Robertson. Not only the growth in the size of the government is putting pressures on the budget, it is also a sign of another worrisome trend - the inability of the private sector to generate jobs and provide opportunities outside of the public sector.
One interesting stat:
In 2006, 31 percent of Iraq’s labor force was working in the public sector, according to the agency for statistics in the Ministry of Planning. The agency expects that figure to reach 35 percent this year, about 5 percentage points short of where the C.I.A. estimated it to be on the eve of the 2003 invasion.
As the article puts it, the problems of private sector growth and job creation...
Harvard Business School recently released a revised version of an interesting paper entitled How is Foreign Aid Spent? Evidence from a Natural Experiment. Erik Werker, Faisal Ahmed, and Charles Cohen look at the impact of foreign aid that many Muslim-majority countries received from oil-rich OPEC countries in the 1970s. (Figure 1 below, taken from the HBS paper, shows the overlapping spikes in oil prices and OPEC foreign aid.) This episode provides the authors an exceptional opportunity to test the impact of aid - typically, it's hard to do because aid may be targeted to those countries where poverty is the worst, or, conversely, those that have improved the most. (This is the familiar problem of endogeneity, for the econometricians out there). Werker et al. come to a pretty harsh...
It was a good sign when I went to read the news online this morning and had to scroll all the way down the page before finding any articles about Turkey. Once I found the New York Times article that I was looking for, it reported that Turkey’s Constitutional Court did not get the seven votes required to ban the ruling Justice and Development Party (AKP). Had one more judge voted for the ban, you can bet that this would be top headline material. The Court’s decision on Wednesday brought a sigh of relief to a lot of people, especially the 46.6% of Turkish citizens who elected the AKP and European Union officials who are in membership negotiations with Turkey.
A ban on the AKP would have discredited what has proved to be the best example of democracy in an Islamic country. All of the...
Earlier this week I had a chance to hear six recent college graduates/graduate students (see bios here) present brief summaries of policy recommendations formed at youth conferences in Rabat (Morocco), Cairo (Egypt), and Amman (Jordan). The event was organized by Americans for Informed Democracy (AID) and The Project on Middle East Democracy (POMED).
Why young people’s views on reform? Youth constitute a majority of the Middle East population and, leaving universities, many young people find themselves at the crossroads - unable to get jobs in the public or private sectors.
One issue that people consistently highlighted was the idea of cultural exchange. Two representatives spoke from the experience of each conference, all three of which included cultural exchange as a...
The G8 continues its meetings in Tokayo, Japan, and there has been a flurry of press releases and statements. Just a week ago, the Financial Times was speculating that the G8 leaders might backtrack on the commitment made at Gleneagles to increase aid to Africa to $25 billion by 2010. However, it looks like the G8 leaders have reaffirmed this commitment in a press release on Development and Africa:At the mid-point to the Millennium Development Goals (MDGs), although progress has been made, significant challenges remain. We renew our commitment to these goals by reinvigorating our efforts, and by strengthening our partnerships with, as well as encouraging the efforts of, the developing countries based on mutual accountability...We are firmly committed to working to fulfill our commitments...
With inflation and political backtracking competing with trends of economic growth in the Middle East and North Africa, the link between economic and political reform has increasingly come under scrutiny in the region. It was a prevailing theme in the recent roundtable that CIPE held for key partners from Algeria, Egypt, Iraq, Jordan, Lebanon, Morocco, Tunisia, Turkey, and Yemen in Hammamet, Tunisia.
Leading private sector organizations from around the region shared successful reform approaches, focusing on entrepreneurship, advocacy, public-private dialogue, and corporate governance. Many of these programs underscore the need for institutions that promote better economic policies and expand growth dividends across a broader segment of society.
It was interesting to see partners not...
My colleagues over at the Doing Business Blog report on the second annual Reformers??? Club awards, which took place last week in New York. In attendance were representatives of the top ten reformer countries: Egypt, Croatia, Ghana, FYR Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China, and Bulgaria. And what was the prize for all their hard work? They got to ring the bell of the New York Stock Exchange! Not to mention favorable press coverage in many of the recipient countries ??? here are a few examples:
Bulgaria in Doing Business Top 10 Survey
Hrvatska u New Yorku primila nagradu Svjetske banke za reforme (if you want to practice your Croatian)
Colombia recibe el ???Reformers Club Top Ten Reformer Award???
IFC: Nation a top business reformer Of all the countries, Egypt...
My colleagues over at the Doing Business Blog report on the second annual Reformers??? Club awards, which took place last week in New York. In attendance were representatives of the top ten reformer countries: Egypt, Croatia, Ghana, FYR Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China, and Bulgaria. And what was the prize for all their hard work? They got to ring the bell of the New York Stock Exchange! Not to mention favorable press coverage in many of the recipient countries ??? here are a few examples:
Bulgaria in Doing Business Top 10 Survey
Hrvatska u New Yorku primila nagradu Svjetske banke za reforme (if you want to practice your Croatian)
Colombia recibe el ???Reformers Club Top Ten Reformer Award???
IFC: Nation a top business reformer Of all the countries, Egypt...
A few weeks ago at the World Movement for Democracy, Larry Diamond, author of the Spirit of Democracy, sat down with our executive director John Sullivan to talk about his new book and “the struggle to build free societies around the world.” You can watch the interview on CIPE’s YouTube channel.
In part 1, Diamond talks about the meaning of democracy and whether it is for everyone or if it has cultural and other limitations. Is it for everyone? A hint - Diamond thinks that democracy is possible in China within a generation.
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In part 2, the discussion goes into the current state of democracy in Africa, including the recent crisis in Kenya and the ongoing conflict in Zimbabwe.
You need to a...
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The April 6th strike has yet to be deemed as a success or a failure but what has been determined is that it has clearly made the international community aware of the overwhelming frustration of Egyptians to meet their basic daily needs and it has shown the true power of social networking capabilities; as the information was passed via email, SMS, Facebook, and blogging. It has also set a precedent for future strikes. One has been scheduled for May 4th, President Mubarak’s birthday. The Facebook page for the May 4th strike already has over 63,000 members. What was behind the strike was a united plea to the government: “All national forces in Egypt have agreed upon the 6th of April to be a public strike. On the 6th of April, stay home, do not go out; Don’t go to work, don’t go to...
Yesterday’s NY Times article provides an interesting perspective on the relationship between democracy, oil revenues, and development on the case of Kuwait. As the story goes, in Kuwait, a public opinion that democracy has hampered the country’s development is becoming more widespread. The reason? Well, it seems like the country is lagging behind its as well oil-rich neighbors who shun democracy in favor of monarchies.
For example,
Many Kuwaitis also complain about government neglect of public hospitals and schools. Problems with the power grid caused brownouts last summer…Although parts of Kuwait City were rebuilt after the Iraqi invasion of 1990, much of it looks faded and tatty, a striking contrast with the gleaming hyper-modernity of Dubai, Abu Dhabi and...
With the price of oil at its record highs, it can be hard to imagine that key exporters thereof, six countries of the Gulf Cooperation Council (Bahrain, Kuwait, Qatar, Oman, Saudi Arabia, and United Arab Emirates) may currently be facing economic problems of any kind. The signs of prosperity seems to be all around as gleaming towers rise in the middle of the desert and guests arrive by helicopter at the world’s only seven-star hotel, Dubai’s sail-shaped Burj al-Arab. And yet not all is well.
A somewhat unexpected addition to the region’s stunning architecture is a… diabetes center in Abu Dhabi. Nearly one-fifth of the UAE’s native population now suffers from diabetes and the statistics are not much better in the rest of the GCC. A result of more sedentary lifestyle and...
Hamid Karzai’s presidency seems to be failing, and some polls show that his support is flagging. Karzai is perceived to be ineffective in reducing corruption weak on the Taliban, and making moves that question his democratic credentials. Several Afghans I spoke to in Kabul believe that the Taliban attack against a military parade on April 27 marked a turning point in public opinion against Karzai as he made the culturally unacceptable decision to flee the scene rather than lead his security forces. The result was a chaotic scene and there is much talk here in Kabul about firing those high officials in charge of security. The Taliban have claimed that they purposely spared Karzai’s life, and this would appear to be true as a sniper could have easily killed the president from the...
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The Financial Times and IFC announced shortlists of potential winners for the 2008 Sustainable Banking Awards. The awards recognize financial institutions that have led the way in integating their policies with social, environmental, and corporate governance objectives. Below is a sample the categories and the shortlisted candidates, the full list is available here.
Sustainable Bank of the Year
Banco Real, Brazil
Citi, US
HSBC, UK
Rabobank, Netherlands
Standard Chartered, UK
Sustainable Deal of the Year
BlueOrchard Finance, Switzerland/Morgan Stanley, US (microfinance loans)
Calyon, France (solar thermal power plants)
Citi, US (financing for rural housing)
Glitnir Bank, Iceland (geothermal power generation)
Merrill Lynch, US (carbon finance to reduce...
In Tunisia recently for a workshop with business journalists on corporate governance issues, I witnessed a generational divide that gives me hope. The key moment in the training came in a debate between an older journalist writing for a state-owned newspaper and younger journalists writing for web-based economic journals about the role of the media in investigative reporting on corporate behavior. The state-owned newspaper journalist challenged why reporters should dig their noses in private businesses if there is nothing wrong. The others protested, saying they must be active in their reporting in order to uncover failures before they become scandals. The split in their views was clear, and I was encouraged by the younger clan who want to shape a new culture that values good...
Against the backdrop of the upcoming local elections on April 8 and the arrest of over 300 members of the country’s biggest opposition group, Egypt is at a critical juncture along its path towards political and economic development with contradictions that are pulling this most populous country in the region in critically opposite directions. With 40 percent of its population living below the poverty line, the Egyptian economy is witnessing consistent growth and is attracting billions of dollars in foreign direct investment. This remarkable dichotomy is dangerously pushing the country along a perilous tight rope between either becoming the success story of economic reform in the region or driving the country into failure and instability.
At a time when the global economy is teetering...
With the world’s eye squarely focused on Iraq, much less attention is being paid to the challenges – and opportunities – for democratic and market reform elsewhere in the Middle East. Yemen, for instance, has recently come into the media focus because of an attempted Al-Qaida attack against the U.S. embassy that injured 13 students leaving a nearby school. But the domestic context of this attack remains poorly understood.
Yemen has an important choice to make. If the entrenched disfunctionalities in its political and economic systems persist, it will be headed toward anarchy or even a failed state. But if reforms continue, it may well become a regional example of progress in building democratic and market institutions.
Yemen is facing significant internal security problems...
An academic paper just came to my attention by Najib Harabi, of the University of Applied Sciences of Northwestern Switzerland (November 2007) that poses an important question: What is the state of corporate governance as a major factor affecting the growth of the private sector in MENA countries? Although Mr. Harabi doesn’t answer the question fully, he makes some assumptions that are worth evaluating. With corporate governance gaining steam in the MENA region, it is a critical that we have good answers to such questions about how corporate governance can foster better investment climates.
The study looks at the World Bank assessment tool on corporate governance (ROSCs) used in Egypt, Jordan and Morocco, as well as a series of regional roundtables from 2003 to 2006 that were...
A recent broadcast by Mosaic News discusses the effect of the U.S. credit crisis on the Middle East, especially Egypt. This is the first time I’d seen Mosaic News, which is produced by Link TV (intended for educational use only) and posted on YouTube. The news broadcast reports:
“The credit crunch has hit the US economy hard. From Wall Street to Main Street, investors’ confidence has been shaken, prompting unusual interest rate cuts by the Federal Reserve. The US dollar has fallen against world currencies and oil prices are touching record highs. Although some Arab economies are booming, proceeds from these skyrocketing oil prices are not filtering down to the poorer Arab countries.
To travel through the Arab world right now is to experience a mood of disgruntlement and doubt...
We are often skeptical of business behaving ethically in developed markets. Some numbers suggest that global trust in business is rather low - and the way to improve it is greater transparency and more governance. This said, we are often even more skeptical of ethical business practices in developing economies. But it is possible, as this article on Turkey shows, for business to behave more ethically, and changes in business practices can be driven by legal and regulatory reforms.
I am not necessarily talking about mandating ethical practices on business. What I am talking about is creating incentives for business to behave more ethically. In Turkey, it is the legal and regulatory reform of the investment and business climate, driven partly by the government’s...
The NPR ran a very interesting story today on the realities of doing business in Egypt from the perspective of several young entrepreneurs. NPR reporter visited Speed Send, a company co-founded by 33-year-old Ahmed El Sherif six years ago that sells office supplies online. When asked about the largest obstacles to starting his business, El Sherif named several problems common not just in Egypt, but many other developing countries, especially in the Middle East and North Africa (MENA):
Scarcity of reliable market data that would help gauge the potential customer base, draft an accurate business plan, and conduct market research,
Difficulties in obtaining bank loans by a start-up; banks only lend to profitable businesses,
Lengthy procedures for registering a business; at the time...
We often talk about the fact that corporate citizenship means something different from corporate philanthropy. You may have also heard the cliché, “doing well by doing good.” But what does corporate citizenship mean in practice and how exactly can it benefit businesses?
Here’s a nice example from Egypt. The Egyptian Junior Business Association (EJB), a CIPE partner, decided to undertake a corporate citizenship program that would be a win-win situation for its member businesses as well as for a particular segment of society. It established a business education program for a creative development center within a university engineering faculty. EJB offers engineering students training that they would not receive from the education system, such as training in project management,...
How do you get the attention of politicians? Egypt’s small business federation simply whisked them away during their lunch break…
Traditionally, small businesses across Egypt received little attention from the government. Although market reforms began in the 1990s, commercial laws affecting small business remained antiquated or were geared toward big business. The prime minister saw no need for legislation fostering small business growth, and parliament never consulted small business owners about their needs.
When the Federation of Economic Development Associations (FEDA) decided it was time it got heard, it rented two buses and parked them outside the Parliament. As members of parliament exited their first session of the day, they were greeted by FEDA representatives who invited them...
Arab countries have always failed to agree on any cooperation policies, any reform agendas, any economic integration policies, and any international agenda. It is just surprising how they managed, with no extensive meetings or discussions, on pressing the already limited freedoms. Not to mention the freedom of speech and expression, the Arab ministers of communication, agreed to issue a charter for satellite TV in a major setback, to also restrict freedom of “listening”.
Arab Ministers met in Cairo on February 12, 2008 at the request of Egypt, and with the strong support of Saudi Arabia. The final document adopted by ALL member states of the Arab League (with the exception of Qatar and Lebanon) requires Satellite TV broadcasting in the region to:
Refrain to offend the...
The recent issue of the Journal of Democracy features several articles that examine the September 2007 elections to Morocco’s House of Representatives. The right-of-center Istiqlal Party won the most votes, ahead of the Islamist Party of Justice and Development that many expected to win. The elections were free and fair, as attested to by international observers. But they fell short of being a genuine expression of democratic governance.
Morocco has been hailed as one of the most reformist countries of the region, improving media freedom and human rights. But at the same time reforms so far have not addressed a fundamental imbalance in the distribution of power. The executive continues to dominate both politics and the economy. The king remains an absolute monarch. He names the premier...
Last week I visited Egypt for the first time. As exciting as I found the ancient wonders to be, I discovered new sources of excitement in voluntary initiatives by business leaders to reshape the way economic policy gets made. Business leadership for change is flowing from different directions, particularly from two CIPE partner associations representing contrasting constituencies.
The Egyptian Junior Business Association (EJB) represents over 400 young managers and business owners. Many of them have international education and experience and are responsible for large companies. This elite, forward-thinking group has been on the cutting edge of promoting ethical business and public service. Since 2004, EJB has issued an annual National Business Agenda based on the CIPE model, which...
We already know that cell phone technology has enabled lots of people in remote areas to access bank accounts and government services. But here is a new one: a recent paper creates a model that predicts that cell phones in Niger lead to a reduction in price dispersion. This would be true since cell phones enable grain traders to perform searches for better prices in areas where it would otherwise be too costly to search.
Interested? Register online for a discussion with the author held by the Center for Global Development in Washington, D.C....
The recent Foreign Policy magazine featured a quiz that included the following question: After the United States, which country imports the most gasoline? A. Germany, B. India, C. Iran. If you guessed Iran, you are right. This may come as a surprise given Iran’s petroleum riches, but it illustrates the consequences of the country’s excessively state-centered economic model. Iran has to import large amounts of gasoline and natural gas because the state subsidies of energy products set prices well below the international levels and artificially boost demand beyond the domestic refining capabilities.
Result? The NYT reports that during this (exceptionally cold) winter many Iranians are left for days or even weeks without heat. Other economic challenges are mounting as well, including...