Extreme poverty digs deeper into Arab region
CAIRO- The sharp disparity between the poor and the rich in many countries triggered mass protests, with many of them happening in the Arab region, driven by the lack of economic growth and the overlap of political issues with developmental and economic ones.
Popular anger in Arab countries is directed at political regimes seen as only good for protecting the ruling classes from change and proposing reforms that are at the expense of the middle and poor classes.
International organisations, such as the World Bank and the UN Economic and Social Commission for Western Asia, report the Arab region is the only one in the world in which extreme poverty has risen in the past six years to touch 20% of the population.
World Bank Senior Vice-President Mahmoud Mohieldin warned against indiscriminate policies that exacerbate the plight of the poor. He said the proportion of people suffering from extreme poverty in the Arab region has doubled to about 5% of the population.
The Arab economic region is the worst worldwide regarding income distribution, with the richest 10% taking two-thirds of the national income, compared with 37% of the national income going to the richest 10% in Europe, 41% in China and 55% in India.
China is credited with reducing the global level of extreme poverty and, Mohieldin said, the Chinese model is deserving of the Nobel Prize in economics. He described the fact that Beijing lifted more than 850 million people out of poverty as an “amazing” feat.
The Chinese government has provided most citizens with adequate shelter and food, free health care and free education through the first nine years of schooling.
Mohieldin said that, in their fight against poverty, Chinese authorities resorted to institutional structures in place since the rule of Mao Zedong rather than building new institutions.
The secret to the success of the Chinese experience lies in that a macro-policy approach was taken. Attention was paid to aspects of political economy, their mechanisms and reactions to them. The Chinese did not neglect the mass communication, which they have become very good at conducting as an integral part of public and economic policies.
Mohieldin insisted that proper communication with the public opinion before implementing new policies and programmes is crucial. He pointed out that Arab countries can take advantage of the Chinese model and adapt it to improve growth rates, stimulate economies and benefit from the potential of young people.
The Arab world needs to take advantage of its strengths. About 60% of the population in the Arab region is under the age of 30. Despite this young demographic, the region suffers from the highest unemployment rates in the world, an average of 10.6%, close to double the average global unemployment rate of 5.7%.
Arab economies need to create 10 million jobs every year to address unemployment and poverty. Those opportunities must come within the context of comprehensive growth policies that enhance women’s participation in the labour market, in support of sustainable development and do not neglect people’s rights nor do they waste the energies of half of the society.
Mohieldin pointed out that random decision-taking and choices are behind many experiments and reform programmes not being completed. This randomness is not in the choice of the model to tackle existing challenges but in decisions taken when reforms take a long time to implement, regardless of whether countries adopt a socialist or capitalist model.
He said the Arab countries opted for a different approach than the Chinese experience where the focus was on completing and improving existing structures. Arab countries opted for focusing on building new structures and that caused a lag in development and pushed poverty rates up.
To help eradicate poverty, Mohieldin advocated maximising investment in people, health care and governance, which means separating ownership from management and the ability to enforce the
rule of law to promote the principles of transparency, disclosure and investment in infrastructure and technology. This approach would not be complete without implementing the rules of the market so it becomes structured and controlled to ensure fair competition.
Mohieldin said the World Bank, with 163 member countries, has helped about 125 countries, including China, Japan and South Korea, to overcome underdevelopment. The World Bank funded the first highway in China and the first airport in Japan and gave South Korea its first loan.
Mohieldin stressed that success in development programmes financed by aid from international institutions is the responsibility of the individual countries because development is a national issue that works locally but it must use all available opportunities and financing programmes from international institutions.
He said technological progress opens new horizons and provides opportunities for employment and operation of small businesses that can contribute effectively to reduce poverty and localise development, if used efficiently. This trend is all the more important because it is in keeping with the interests of young people and can help them develop their projects.