Jim Yong Kim, President, World Bank Group, on inclusive governance in the MENA region: Viewpoint

Jim Yong Kim, President, World Bank Group

In 2015, for the first time, the rate of extreme poverty was projected to fall below 10%. Our research and experience tells us that three things have been critical to reducing poverty and boosting prosperity: inclusive economic growth, investments in people’s health and education, and insuring against risks that can plunge the vulnerable into poverty. Shaping future governments so they deliver on these responsibilities is our shared responsibility and essential to achieving our twin goals of ending extreme poverty by 2030 and boosting shared prosperity.

The MENA region has recently been affected by changes in the global landscape. Lower oil prices are forcing governments across the region to re-evaluate policies that have been in place for decades. Economies dominated by large firms are not producing enough jobs, and this is true for countries that both export and import oil.  Furthermore, economies dominated by fossil fuels are currently not earning enough oil revenues to support large public sector expenditures and fuel subsidies. Throughout the region, highly centralised bureaucracies have not delivered the quality health and education services needed to enable young people to compete in the global marketplace. The net result is a long period that discouraged innovation and entrepreneurship.

So what is the best way forward today? We believe that the answer is what we call inclusive governance. At the core of inclusive governance is a social compact between government officials and their citizens that is based on three principles. First, governments must be transparent in their actions and fully engage with citizens. Second, governments must invest in their people to give them opportunity to reach their full potential. And third, governments must create business environments that encourage innovation, competition and private sector investment, which will, in turn, create jobs and increase economic growth. Community engagement in the UAE has helped its government promote investment in people – a second important element of inclusive governance. We know that investing in people, especially in their health and education, is critical to promoting opportunity and prosperity. Research has shown that education helps people escape poverty, and this begins at the earliest ages. Globally, earnings increase an average of 10% for every year of education for employed workers. Educated women and girls can be particularly effective agents of social and economic progress, both for society and their children. Educated mothers earn higher wages and invest more in their children’s health and education.

Governments that invest in people’s health and education also create a powerful counter-narrative to violent extremism. Instead of sowing seeds of discontent, these governments promote opportunity, and that opportunity, if coupled with improving the business environment, can lead to more job creation.

Governments must ensure that the business environment helps spark innovation, entrepreneurship and competitiveness. When governments do not promote a fair and competitive business environment, when they limit opportunities by favouring allies, they foster a form of crony capitalism that can eventually lead to instability and chaos.

For the MENA region, and for all areas in the world, the path to stability and prosperity is through inclusive governance – actions that foster individual opportunity through quality public services and an open and competitive business climate.

Leaders must be transparent in their actions and engage with people so that they feel they are in fact citizens; it means leaders must invest in their people, and it means they must create business environments that encourage private sector investment. If the region can commit to the kind of good governance that has built the modern UAE, the prospects for peace and prosperity would greatly improve. 

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