The political economy of job creation in MENA - Economic Research Forum (ERF)

The political economy of job creation in MENA

The political economy of job creation in MENA

By Aalaa Halaka


Dr. Ishac Diwan is a visiting professor at SIPA Columbia University, and the chair d’excellence monde Arabe at Paris Sciences et Lettres. He was a discussant on the 3rd plenary session of our 25th annual conference in Kuwait. Following the theme of the plenary session “The role of knowledge in the process of innovation in the global economy”, Dr. Diwan comments on the keynote presentation by providing a political economy context for its application on MENA countries.



Dr. Diwan argues that MENA markets function differently from countries that are already catching onto the technological industrial revolution of artificial intelligence and robotics. MENA governments lack the incentive and readiness to adapt and support such practices due to their very nature, being “fierce and fragile”. Their fragility, explains Dr. Diwan, is manifested in the segmentation of firms and labor in the economy.


A fragile state typically establishes and maintains a circle of crony capitalist formed of a few big firms that monopolize the market and employ enough labor to protect the government’s existence. On the other hand, these economies are also characterized by a large informal sector, where a large share of the labor force works without unionized representation that would enable them to enforce collective pressure on government.


As a result, this socioeconomic fragmentation leads in turn to political fragmentation over economic development planning and decision-making; leading these countries into a trap. In conclusion, Dr. Diwan refers back to an idea presented by Sir Paul Collier during his presentation on the 1st plenary session of the conference on clusters of knowledge and development: The power of changing ideas. Dr. Diwan debates the need for capitalizing on the young spirit of uprisings and calls for change across the region to guide the development and growth rhetoric to come closer to Sir Paul’s economic “Utopia”, which is characterized by knowledge-sharing, specialization, and decentralization.


The Economic Research Forum’s 25th Annual Conference is held in Kuwait City, on 10-12 March, 2019, under the theme of Knowledge, Research Networks, and Development Policy. . Visit the conference website to find out more about the event and access papers, videos and blogs.