Private Sector Development in South and East Mediterranean Region

57 Pages Posted: 9 Oct 2012 Last revised: 18 Oct 2012

See all articles by Richard Woodward

Richard Woodward

Centre for Social and Economic Research (CASE); University of Edinburgh - Business School

Mehdi Safavi

University of Edinburgh Business School

Date Written: October 8, 2012

Abstract

This report is concerned with the analysis of privatization and private sector development for the eastern and southern Mediterranean countries partnered with the European Union and collectively known as MED-11. Noting that the analysis applies to the situation prior to the dislocations of the Arab Spring, we review the shift in the relative shares of the public and private sectors in these countries, as well as the business climate affecting the development of the private sector, examine a number of cultural factors that may influence the development of the private sector, and discuss some alternative scenarios for future developments. In the last 20 years, efforts have been made in all countries of the MED-11 to encourage private sector development and, to a greater or lesser extent, privatization of stateowned assets. However, there is a great deal of differentiation among the countries in the group. In the MED-11, Israel has not only the most business-friendly policyenvironment but also the most developed private sector, accounting for almost 80% of employment. The other countries of the region can be divided into two groups: one, including Algeria, Libya, and Syria, where reforms promoting privatization and private sector development have been very limited, and the rest, in which they have been much more extensive (the Palestine Authority is, for obvious reasons, a rather special case). A generally poor business environment makes for a large informal sector in almost every country in the region; however, generally speaking, we do not find the cultural factors we examine to be hostile to private sector development. Optimistic, reference and pessimistic scenarios are discussed; which of these is realized in any particular MED-11 country will depend greatly on the direction of change following the events of 2011’s Arab Spring.

Keywords: Private Sector, Privatization, Business Climate, Middle East, North Africa

JEL Classification: L32, L33, L50, O16, O17, P33

Suggested Citation

Woodward, Richard and Safavi, Mehdi, Private Sector Development in South and East Mediterranean Region (October 8, 2012). CASE Network Reports No. 110, Available at SSRN: https://ssrn.com/abstract=2158722 or http://dx.doi.org/10.2139/ssrn.2158722

Richard Woodward (Contact Author)

Centre for Social and Economic Research (CASE) ( email )

Al. Jana Pawła II 61/212
00-944 Warsaw, 01-031
Poland

University of Edinburgh - Business School

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
United Kingdom

Mehdi Safavi

University of Edinburgh Business School ( email )

Room 2.01, University of Edinburgh Business School
29 Buccleuch Place
Edinburgh, EH8 9JS
United Kingdom
+44(0)131 650 3799 (Phone)

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