| 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
policy environment 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. |