Play economics, not politics

RECENT events in Egypt made me sit up and think about how fortunate I am to live in the United Arab Emirates (UAE).mini storage Living here, it is all too easy to forget that we sit smack in the middle of a region that is seen as the world capital of bad news. Think of this - Dubai is under four hours' flight time from Afghanistan, Iran, Iraq, Syria, Somalia and Egypt.Less than two years ago when the revolutions began in Tunisia and Egypt, there was optimism in the air. People referred to the uprisings in rather glowing terms as the "Arab Spring". Spring signified hope, rebirth, renewal, rejuvenation and vitality. Subsequent events have suggested that the term Arab Spring was possibly a misnomer. If you talk to the common man in Misrata or Tahrir Square, he would now say that things have gotten worse, not better. In fact, the promise of a spring has been replaced by a grim reality of summers of dashed hopes, autumns of disappointment and winters of discontent.The challenge with the post-spring Arab administrations is that they have been consumed in playing politics, instead of focusing on economics. How else would one explain the Muslim Brotherhood administration's focus on gerrymandering and constitutional amendments to ensure their parliamentary dominance, ahead of concluding an economic assistance programme from the International Monetary Fund even in the face of Egypt's fast dwindling foreign currency reserves?It would be too simplistic to ignore the complex interplay of social, ethnic, religious, domestic and geo-political factors at play in each one of these revolutions. All the same, there is no disputing the fact that demographic change and unemployment, especially among educated youth, played a very significant role. The problem cannot be fixed without economic development. The need of the hour is economics, not politics.Economic development is the best antidote for uprisings. Growth creates jobs, and jobs reduce poverty. To fuel this virtuous circle, you need investment - and here is the good news. The Middle East and North Africa (MENA) region as a whole has sufficient money to fund its own growth. With oil prices stubbornly hovering around the US$100 mark, MENA is still generating considerable surplus. It also has large accumulated surpluses from the past which has traditionally been invested outside the region. If some of these monies can be redirected towards investing at home and in the region, it can make a tangible difference. This of course assumes that the necessary pre-conditions of peace, stability and a welcoming attitude儲存to foreign investment are created in the first place.Assuming that money is available, what should it be spent on? While by no means an exhaustive list, I would start with:Infrastructure: Not just roads, ports and airports, but also institutional infrastructure around rule of law, property rights, sanctity of contracts, credit bureaus and customs regimes, to name a few.Technical education: With a focus on science, technology, engineering and mathematics. The region significantly lags behind the rest of the world on everything from SAT scores to patents. The University of California alone registers 10 times more patents than the entire region (excluding Israel). Job creation is about employability and skills-building. We need to create workers who can build widgets, research enzymes, split stem cells, operate lathes, or make good furniture.Nurturing private companies in manufacturing and services: Eastern Europe, communist-run until few decades ago, has three times more private sector companies per capita than the MENA region. The public sector often accounts for more than 50 per cent of the MENA economy, and even the private sector entities that exist tend to be often closely associated with the state.Promoting intra-regional trade: Arab companies account for less than one per cent of world non-fuel exports, compared with 4 per cent for Latin America with a similar population. Worse, intra-Arab trade accounts for less than 10 per cent of the exports due to a combination of non-tariff barriers, red tape and poor logistics. For the region to outgrow its reliance on hydrocarbons and create jobs, it needs to develop a competitive manufacturing and services sector. More trade would create economies of scale and encourage adoption of new technologies.An active Infrastructure Development Bank financing these investments: Asia and Africa have the Asian and African Development Banks respectively, Latin America and Europe have their own. The Middle East currently does not have an active one. We need one to supplement what commercial banks and capital markets do to finance infrastructure."It's the economy, stupid" was the famous slogan of then US presidential candidate Bill Clinton's campaign of 1991 when he unseated George HW Bush who was basking in the aftermath of a successful Operation Desert Storm. The parallels are quite stark. You may win a war, but you will get unseated if you ignore the economy. Play economics, not politics.The writer is group executive director and CEO, Europe, Middle East, Africa and the Americas, Standard Chartered儲存倉