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 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 place 2. 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

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 HOME FOREIGN 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 to promote 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 SMEs Solution: 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