The World Bank History making Policy The political economy of spatial policy in the Middle East and North Africa REGIONAL AND TERRITORIAL DEVELOPMENT: THE WORLD BANK’S EXPERIENCE Alex Kremer Middle East and North Africa Region Sustainable Development Department European Commission’s “Open Days” Brussels, October 8, 2008

The World Bank We think of a cycle of economic agglomeration… Explicit policies Economic incentives Poor track record efficiency economies of location enterprises move in agglomeration Policy response

The World Bank World Bank study on Spatial Inequality in Middle East and North Africa A response to politicians’ concerns : spatial inequality = migration to the cities, = urban unemployment, = religious radicalism = political opposition = a colonial vestige How to give good economic policy advice that still takes account of political concerns ? What if we add politics ?

The World Bank Does spatial history … C19th – 1950s: Limited geographical spread of colonial settlement. Investment concentrated in port cities and administrative capitals. Post-independence: consolidation of unitary administrations on governorate model.

The World Bank … tell us where we are ? 1960s-70s: state-led industrialisation strategies: regional and metropolitan preferences. 1990s-2000s: fiscal constraints undermine governments’ ability to guarantee livelihoods: perceptions of exclusion from growth.

The World Bank In Egypt, people feel left out of growth … Male youth unemployment rate 21% in 2002 Since 2006 … Real GDP growth 7% Real wage fall 1%

The World Bank … and there is spatial inequality … Low poverty rate Medium High Rural person 2 ½ times More likely to be below poverty line.

The World Bank … but is it the squeaking wheel … Political support for government is weakest in large cities. Source: World Values Survey

The World Bank … that gets the oil ?  Implicit taxation of farmers until 1990s: forced deliveries (rice) and low prices (cotton).  Central transfers to governorates not compensating for differences in tax base.  36% of government spending on energy subsidies (2006).  Local govt share of spending 22% to 16% 1996/7 to 2005/6.  Sanitation coverage. Cairo 98%. Qena 10%..

The World Bank metropolitan political demand metropolitan spending bias migrants move in And we have a politico-economic cycle efficiency economies of location enterprises move in agglomeration

The World Bank “Spatially-blind” policies that might erode the politico-economic cycle  Letting farmers benefit from high world prices;  Administrative deconcentration;  Bottom-up planning of local investments;  Improve quality of provincial public health and education facilities;  Converting commodity subsidies to targeted social programmes.  Giving provincial businesses adequate access to officials Reforming public fiscal and administrative systems and structures Addressing the social motivation for migration Making government more accountable to provincial populations

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