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Syria: Reconstruction to foster peace

Report: English | Arabic | French

Press release: English | Arabic |

French

Video presentation: English | French |

Arabic

Author Interview (France24): Arabic

The refugees coming to Europe are the

tip of the iceberg, representing a mere

10 percent of registered refugees. The

majority are in neighboring countries

of Turkey, Lebanon, Jordan and Iraq.

Among those who remained within the

Palestinian economy, suffering under

restrictions, political instability and

the divide between West Bank and

Gaza

The Palestinian economy is not growing

enough to raise living standards and

reduce high unemployment. The

economy has witnessed a sharp

deceleration in economic growth, from

over 8 percent during 2007-11 to 3

percent during 2012-15. The sharp

decline in growth has stifled the

economy's ability to create jobs for a

growing youth population.

For exporting, good governance is

as important as access to finance

Industry and financial profiles of

MENA firms matter for explaining

country export levels and challenges

firms face to export higher value-

added goods. Higher value-added

sectors producing more innovative

products tend to have higher shares of

non-physical (intangible) assets. These

sectors also require investments at

magnitudes that few firms can readily

finance through internal financial

resources, which renders these sectors

more dependent on the banking

sector. In contrast, lower value-added

Business as usual hampers Jordan’s

economic progress

This macroeconomic, poverty and

sustainability assessment for Jordan

reinforces the perspective that

business-as-usual economic

performance will not be enough to

regain past growth levels, let alone

reach the 7.5 percent growth

scenario targeted in the Jordan 2025

vision document.

Jordan is in a risk-rent equilibrium,

with exceptionally high exposure to

exogenous shocks arising through

borders of Syria, 7.6 million people are

now considered Internally Displaced

Persons (IDPs).

The report first takes stock of the

damage and death through the

experiences of refugees in neighboring

countries, and then delves into the

violence and devastation inside the

country. The final section illustrates

that a more audacious development

agenda can help bring about relief and

appeasement in the short-term, and

stability in the long-term. While full-

scale reconstruction may have to wait

for peace before it can start, a credible

reconstruction strategy can foster the

return to peace. The report calls for

the international community to be the

guarantor of an inclusive

reconstruction strategy that not only

makes peace sustainable tomorrow,

but makes it happen today: peace and

reconstruction are two sides of the

same coin.

Authors: Shanta Devarajan, Lili

Mottaghi, Quy-Toan Do & Mohamed

Abdel Jelil.

The economy has long suffered from

the restrictions and political instability

that continue to constrain private

sector activity. In addition, the decline

in donor funding from 32 percent of

GDP in 2008 to 6 percent in 2015 has

significantly contributed to the recent

economic weakening. The internal

divide between the West Bank and

Gaza, which has created a dual

regulatory framework, has also

negatively impacted economic activity

and the tax base.

Produced by team from the West Bank

and Gaza Country Director’s office (WB)

sectors tend to have higher shares of

tangible assets, usable as collateral for

bank loans. Access to finance by more

innovative firms at the requisite

amounts, would then depend on the

capability and comfort level of the

financial sector to accept intangible

assets as collateral.

Using sector- and firm-level export

data with country-level indicators, the

analysis suggests that countries with

more developed financial sectors and

better governance concerning

property rights, tend to have relatively

more higher-value-added exports, and

relatively fewer exports from lower

value-added sectors. To enhance

specialization and thus diversification

of exports, the results suggest a

critical need for: (i) deeper financial

sector development that strengthens

market-based systems such as asset

registries and credit reporting

agencies, and (ii) strengthening of

legal and governance frameworks for

property rights protection.

WB Policy Research Working Paper

No. 7616

Authors: Christina A. Wood & Judy

Yang.

spillovers from regional conflict,

commodity prices and shifts in

geopolitical relations. The country is

characterized by: an inability to

sustain growth accelerations, a very

small export base, persistent fiscal

and external balances, and

bottlenecks contributing to a trend

decline in investment as a share of

GDP. Jordan’s public debt has risen

through several “red lines” and its

scope for any further buffering of

shocks is gone, especially with the

financing needs arising from the

Syrian crisis.

Favorable aggregate social indicators

reveal significant underlying

vulnerabilities. Despite relatively low

poverty headcount (around 14

percent), a third of the population

experiences transitions into poverty

during a year and lower quintile

household expenditures will be

squeezed by the (needed)

adjustments in energy and transport

costs. Although access to social sector

services is high, there is considerable

variability in quality due to financing

and delivery mechanisms, especially

in health.

Authors: Kevin Carey, Ahmed Attiga

& Paul Barbour.

Publication summaries

How do people in MENA evaluate their economic

prospects?

Lili Mottaghi | MENA Quick Note #156

The impact of war and peace in MENA

Lili Mottaghi | MENA Quick Note #155

Blogs by World Bank authors or guests on a WB blog

How the Middle East and North

Africa can benefit from low oil

prices

Shanta Devarajan | Future

development | 4.6.16

Is diversifying exports a path toward

peace in Syria?

Saurabh Mishra | Let’s Talk

Development | 3.31.16

Just give them the money: Why are

cash transfers only 6% of

humanitarian aid?

Duncan Green | Public sphere |

03/24/16

Addressing the education emergency in

Lebanon

Noah Yarrow | Arab voices and views |

3.24.16

Five lessons learned to take action

for peaceful and inclusive societies

Rediet Yibekal Wegayehu |

Development for Peace | 4.4.16

Can debating skills help reduce youth

extremism in Tunisia?

Christine Petré| Arab voices and

views | 4.29.16

Morocco—Results-based financing

for disaster risk and climate

resilience

Axel Baeumler & Olivier Mahul |

Arab voices and views | 4.20.16

Reforms that Kuwaiti and DC schools

have in common

Simon Thacker| Arab voices & views

| 5.2.16

Jordanian venture aims to use

technology to empower refugees

Christine Petré | Arab voices &

views | 3.27.16

Young Tunisian entrepreneurs push

to change attitudes to jobs

Christine Petré| Arab voices & views

|4.25.16

Tunisia & Italy shine light on how

electricity trade can help stabilize

the region

Sameh Mobarek, Moëz Cherif &

Fanny Missfeldt-Ringius | Arab

voices | 4.21.16

Empowering a greener future

Mafalda Duarte | Development in a

Changing Climate | 3.29.16

Events

UPCOMING

Book Launch "Al Qaeda, the Islamic State, and the

global jihadist movement: What everyone needs to

know"

Wednesday June 8 @ 12:30 pm

World Bank J Bldg Rm J1-050

Speaker: Daniel Byman (Georgetown Univ. & Brookings Institution)

Organizer: MENA Chief Economist’s Office

PAST

Boosting MENA's

economy

through peace &

reconstruction

Video: English | French | Arabic

Speakers: Hafez Ghanem (WB MENA

VP) & Shanta Devarajan (MENA Chief

Economist)

WB Spring Meetings briefing: The

latest economic updates, challenges,

and opportunities facing the region.

The economic prospects of the region

and the immediate actions that

development institutions can take

inside Syria in order to make peace

happen today. | 4.12.16

Mashreq Day:

Pushing the

frontier in a

conflict-affected

region

Agenda & Speakers:

Video: Part 1 | Part 2 | Part 3 | Part 4

Event summary: Arabic

The Mashreq Day event aimed to

feature recent work undertaken by the

World Bank in the Mashreq countries

(Lebanon, Jordan, Iraq, Syria) since the

onset of the conflict in Syria, focusing

mainly on alleviating the pressures

emanating from the serious spillovers of

the crisis on neighboring countries. The

event also showcased data from a

preliminary damage needs assessment

conducted (remotely) by the Bank on six

Forced

displacement:

A global

development

challenge

Discussion with Jordan’s Queen Rania

and other high ranking officials.

Video: English | French | Arabic

With the number of refugees and

displaced persons at historic highs,

forced displacement has become a

global crisis with developmental

repercussions. While refugees are

creating a crisis in Europe, host

countries in Africa and MENA have

been shouldering a much heavier

burden for years. Supporting the

welfare of refugees constitutes a

Productivity

convergence

and learning by

exporting, firm-

level evidence

from Tunisia

Video | Paper

Presentations: Speaker’s |

Discussant’s

Speaker: Jieun Choi (Economist, WB)

Discussant: Bob Rijkers (Economist,

WB)

4.20.16

cities and six sectors in Syria, in addition

to possible initiatives for launching the

reconstruction process in the war-torn

country once peace is established. |

4.13.16

English | Arabic

global public good. Improving the

development response will require

innovative approaches and close

coordination between humanitarian,

development and all global partners,

including governments.

Co-hosts: UNHCR and World Bank

Group | 4.15.16

Endowments or

discrimination?

What makes

female-headed

households

poorer in Egypt?"

Video | Paper

Presentations: Speaker’s |

Discussant’s

Speaker: Shireen AlAzzawi (Santa

Clara Univ.)

Discussant: Benedicte Leroy De La

Briere (WB) 5.4.16

Interesting Reads

Arab Social Contract

Shantayanan

Devarajan on "How

the Arab World Can

Benefit from Low Oil

Prices"

Hazim Ali | News & Events, Center for

International and Regional Studies,

Georgetown Univ. in Qatar | March

2016

Refugees, IDPs, Remittances

A Million Ways to

Die in Syria

Debarati Guha-Sapir | Project Syndicate

| 3.22.16

“While an important initiative to

improve the delivery of health and

humanitarian assistance has been

launched by the United Kingdom’s

Department for International

Development and the Wellcome Trust,

it is nowhere near enough. Much

Private Sector Development & Growth

Dynamics of

Household

Enterprises in Egypt:

Birth, Death, Growth

and Transformation

Caroline Krafft | ERF Working Paper

No. 983 | 03.16

In addition to identifying the patterns

of enterprise creation, dissolution, and

growth, the paper identifies the

individual, household and enterprise

characteristics that contribute to these

dynamics. The findings demonstrate

Resource Curse & Diversification

Diversification of Middle Eastern

economies is more a political than an

economic challenge

Adeel Malik | Policy Brief #19,

Lebanese Center for Policy Studies |

3.23.16

Constraints include barriers to

adopting a more representative

political system, absence of broad

economic diversification, and lack of

intraregional trade. Substantial

development in the Arab World will

likely need a new political settlement.

For such a settlement to be accepted,

Individual

Preferences for

Democracy in the

Arab World

Explaining the Gap

Mohamad Al-Ississ and Ishac Diwan |

ERF Working Paper No. 981 | 03.16

The paper uses the World Value Survey

to determine the preference of MENA

socio-economic groups for democracy

over autocracy, and how these are

affected to self-interest, culture and

policy. The analysis reveals a

democratic gap, correlated with and

explained in part by lower education

effects, and stemming from power

preservation policies pursued by past

autocratic regimes of the past, rather

than by local culture alone.

Winning the hearts and minds of Arab

youth

Samar Fatany | Al-Arabiya | 4.6.16

Burson-Marsteller Arab Youth Survey

finds that 53 percent of young Arabs

prioritize stability over democracy and

believe that the main obstacles facing

the region are unemployment, rising

living costs and civil unrest. The

overwhelming majority of young Arabs

stronger humanitarian action in Syria is

needed this year.”

Remittances sent to and from refugees

and IDPs: Literature review

Carlos Vargas-Silva | KNOMAD working

paper #12 | 3.24.16

Reviews of evidence on remittances in

the context of forced displacement. The

evidence suggests that remittances are

often affected, and affected more

strongly, by factors in the displacement

context that are different from factors

in other contexts, such as economic

migration.

Conflict and Extremism

Re-drawing the map

of the Middle East

Is the Sykes-Picot Agreement (that laid

the groundwork for the borders that

would later define Iraq, Syria, Lebanon,

that the recent economic downturn in

Egypt had a strong negative effect on

household enterprise survival as well

as employment growth in surviving

enterprises.

Is corruption

“greasing” or

“sanding” the

wheels of

innovation of MENA firms?

Tamer Taha | ERF Working Paper No.

982 | 03.16

This article explores the effect of

institutional obstacles in Egypt and

Tunisia on the innovative behavior of

firms, and estimates the micro level

interactions that occur between

corruption and business permits. The

results show a positive effect of

corruption on innovation only as a

“greasing” mechanism to bypass the

bureaucratic obstacles of business

permits. Such an effect is even more

pronounced if the firm is surrounded

by other firms with corrupt practices.

interests of the elites need to be

taken into account, and regional

linkages need to be strengthened and

capitalized on.

Avoiding the

Resource Curse in

Lebanon

(in English and

Arabic)

Jad Chaaban | Policy Brief #18,

Lebanese Center for Policy Studies |

3.31.16

If revenues from the anticipated oil

boom are spent with no oversight or

proper planning, Lebanon may well

collect and allocate large streams of

cash that make limited contributions

to economic development. But the

‘resource curse’ could be avoided if

appropriate policy adjustments are

implemented in tandem, drawing

from successful experiences of a few

resource-rich countries such as

Norway. The optimal response that

takes advantage of the boom while

mitigating its potential negative

implications includes a set of fiscal,

monetary, exchange rate, and

structural reform policies.

reject ISIS and believe the group will

fail to establish an Islamic State.

MENA economic

growth: The challenge

of youth, the

imperative of

pragmatism

Jean-Pierre Lehmann | Forbes | 4.6.16

Laying the foundations for well-

educated and well-motivated youth of

both genders will transform MENA into

a highly desirable investment location,

both domestic and foreign.

Jordan, Israel and the kingdoms of the

Arabian peninsula), when the trauma

really began, as some believe?

Podcast Interview with Tarek Osman

(host of the BBC Radio 4 series The

Making of the Modern Arab World) |

The Sunday Edition with Michael

Enright, Canadian Broadcasting

Corporation | 2.28.16

Are billionaires

good for growth?

Donna Barne | Voices blog | 3.29.16

MENA is the only emerging-market

region where the share of inherited

wealth is increasing and

entrepreneurship is declining. Self-

made billionaires in the region are

highly dependent on resource-related

and politically connected wealth.

Crony capitalism, in which the wealthy

and powerful use political connections

to distort government regulation and

taxation, reduces productivity and

harms growth.

Selected Links

Previous MENA Knowledge Bulletins

Issue 8 | Issue 7

Issue 6 | Issue 5

Issue 4 | Issue 3

Issue 2 | Issue 1

World Bank Research Digest:

Special MENA Issue

English | Arabic

Economic Research Forum (Cairo)

Working papers

OCP Policy Center (Rabat)

Research papers | Policy notes

Lebanese Center for Policy Studies

(Beirut)

Policy briefs

Other MENA think tanks

Links

About us The MNA Knowledge Bulletin is produced by the MNA Chief Economist’s Office (MNACE) to highlight knowledge outputs on development issues of

relevance to the Middle East and North Africa (MENA) region, generated by World Bank experts. The Bulletin also informs on World Bank MENA events and

interesting MENA reads from other sources. For further information, or to subscribe/unsubscribe, please contact Christina A. Wood and Isabelle Chaal-Dabi