The principles of Arab Reform: Economic Reform

A continuation of the Alexandria declaration 2004

Secondly: Economic Reform

17- Economic reform includes all legislation, policies, and measures that would free the national economy and turn it efficiently in accordance with market mechanisms. This would be done in a manner that would ensure economic prosperity and facilitate integration with regional and global economies

18- Needless to say, this economic concept implies the resolution of many debates and controversies over the orientation of the economic system, including many details such as the role of the state, the relationship between the role of the state and the market, and the social dimension of development.

19- All participants agreed that the current performance of Arab economies does not meet the challenges that need to be confronted, nor does it reflect the latent potential of our financial and human resources. This deficient performance of Arab economies and the requirements of the future call for a radical economic reform to change the current situation. Slowing down the implementation of the economic reform has an enormous cost that will only increase with time. The Arab economic situation is captured by the following indicators

a) Decline of economic growth rates of the gross national income and the per capita income compared to international indicators;

b) Decline of the Arab countries' share in international trade, with exports limited to primary products, and with a marginal share in the high-value-added products;

c) Reduction of the Arab region's share in foreign capital flows, including direct and indirect foreign investments

d) Failure to generate job opportunities for new job seekers with a sharp increase in unemployment rates, which are higher than the average in developing countries, mainly among youth groups and women

e) Increase of poverty rates in Arab countries among the unemployed as well as the employed

20- The gamut of policies proposed and implemented in the region have focused mainly on creating overall stability, and reducing rates of inflation through the triad of stabilization, privatization and liberation. Such programs did not address other important issues such as unemployment and the provision of basic social services.

21- In the predominantly young Arab world, youth employment, the quality of education and of social services, and micro enterprise programs should be essential elements in reform programs. There should be clearly established priorities, with a special focus on the institutional framework required to achieve overall social and economic reform.

Structural Reform

22- Therefore, we propose the following to achieve structural reform

a) Arab countries should declare clear plans with specific time frames for institutional and structural reform, with a precise definition of the role of the state in encouraging economic activity and providing an enabling environment for the private sector, and for the public sector in those areas where it has a comparative advantage, and suitable competencies. This should be done with clearly defined plans to effect a radical change in governmental administrative systems, to minimize the bureaucracy, and to raise the efficiency of governmental authorities dealing with investors, importers, and exporters, in such matters as taxes, customs, and license issuing authorities.

b) Encouraging privatization programs, including in the banking sector, with appropriate regulation to safeguard the public interest, while reducing government investment, except in strategic areas and for public goods, and abolishing economically unjustified government monopoly rights in order to encourage the private sector, attract more investment, and maximize the participation of the private sector in generating job opportunities.

c) Setting criteria and regulations to enhance the quality of national products and to establish national councils supporting competitiveness, along with carrying out and making public continuous evaluation results

d) Inculcating good governance rules for economic activity, with special focus on transparency, accountability and the rule of law.

e) Information and data are extremely important to make decisions and for a realistic and sound analysis. There is a need to pass laws that would obligate authorities producing economic data to make this data available and easily accessible, whenever needed according to clear and agreed rules. Comprehensive databases of Arab economies should be prepared.

f) Ensuring environmental conservation in all economic activities

g) Participants also call for providing mechanisms suitable for training those employed in agencies that either supervise or participate in economic activity, directly or indirectly, such as businessmen's associations, banking unions, as well as prosecutors and the judges who are responsible for dealing with cases and disputes related to new economic and financial transactions and tools, such training to be provided the training institutes for judges.

23- One the regional scale, we would like to emphasize

a) Developing Arab financial sectors in general, and banks in particular, and encouraging the establishment of big banking institutions, as well as the modernization of networks of Arab stock markets

b) Developing and networking the infrastructure for information technology in the Arab world

c) Activating Arab agreements by setting achievable objectives and identifying some priority sectors housing good chances of success in promoting greater inter-Arab economic cooperation, such as transportation, electricity, energy, and information and communication technology. A follow up body affiliated to the Arab Economic Unity Council should be established to regularly report results to the Arab Summit and to make these results and reports public.

d) Agreement on a binding framework to liberalize trade in services between Arab countries.

e) Organizing an Arab labor market through drafting and ratifying a multilateral agreement to coordinate the movement of Arab labor within a fixed-term time-frame, and to define work conditions for the duration of stay in host countries and determine the responsibility of the labor exporting countries in evaluating the skills and capacities of the labor force. They should also prepare training programs for Arab labor to enable them to enter foreign markets, according to protocols and evaluation standards agreed upon with foreign countries.

f) Establishing an Arab institution, funded and managed by the private sector, to train leaders in management in order to enable new generations to develop and carry out reform programs

24- To increase the Arab World's effectiveness within the international economy, we suggest

a) Calling on developed countries to open their markets to Arab exports, especially agricultural products

b) A highly efficient specialized administration should be formed and affiliated to the League of Arab States in order to positively participate in world economy by increasing the exports of goods and services, increasing the relative share of foreign investments in Arab countries, and benefiting from education, training, and work opportunities in different markets. Such an administration should follow up on world trade issues, empowering Arab countries to actively participate in the World Trade Organization, coordinating Arab positions, defending their interests, training and rehabilitating Arab cadres to negotiate issues of trade liberalization and agriculture, and ensuring access to market for industrial products.

25- To promote investment, we would like to emphasize

a) Resolving forcefully problems that obstruct Arab and foreign investment

b) Establishing an effective mechanism to settle economic disputes among investors

c) Dealing with Arab investments in all Arab countries in a manner equal to national investments

d) Encouraging innovation, attracting investment necessary for research and development, launching projects in high value added goods and services, and protecting intellectual property rights

26- Addressing poverty in its multiple dimensions, including social and political marginalization, lack of participation and constrained opportunities for upward mobility. This precludes reliance on economic growth alone as sufficient instrument for poverty reduction. It calls for the adoption of a closer implementation timeframe to fight poverty in conformity with the United Nations' Millennium Development Goals

27- Given the importance of the employment issue, especially with regard to Arab youths and women, we suggest:

a) Developing micro and small enterprise funding programs to help solve the unemployment problem, while paying special attention to women.

b) Empowering women to participate in the national work force and to make use of their experience and qualifications.

c) Reviewing current economic policies from a fully-employment perspective, to address five million new Arab job seekers annually, with special emphasis on promoting youth employment. This will only be achieved by implementing policies that could raise actual economic growth rates to no less than 6 % -7% annually, on average, over the coming decade. This requires integrated policies to increase investments, promote capacity building, and better direct and mobilize local and foreign savings.

28- Participants emphasized that Arab civil society and private sector institutions can contribute to economic reform. This contribution would be achieved by participating in priority setting, and by working hand in hand with governments in implementation. Civil society institutions have an important role to play in following up with governments on measures and solutions regarding reform.

29- In order to implement these proposals, the participants call upon the Bibliotheca Alexandrina to organize, in collaboration with the League of Arab States, a series of conferences and specialized seminars to discuss these issues in a manner commensurate with their significance and technical specificity. It is important that these discussions take place within a workable framework that responds to the challenges the Arab economies are facing on the local and regional levels, with a view to come up with specific proposals to be submitted to Arab governments. The most important of these topics are:

a) Arab financial sectors and investment constraints

b) Unified customs system and inter-Arab trade

c) Arab competitiveness and evaluation standards, establishing national councils for Arab competitiveness and the unification of evaluation standards.

d) Incubators for high technology products

e) Public resources management in the Arab world

f) Good governance of economic activity

g) Raising the level of economic media