Opening up and Distribution in the Middle East & North Africa: The Poor, The Unemployed and The Public Sector

Abstract The paper reviews the links between long-run growth patterns, the process of opening up, and the effects on income distribution. Three themes are developed. First, the historical pattern of development brought dividends to all until the end of the oil boom, but is now bankrupt and is a potential disaster for poverty and employment. Second, much of the region is on a knife edge between two options: opening to trade combined with public sector reform and hanging on to the old path and social contract. Risks are attached to both paths, but the first can lead to robust and broad employment growth in the medium term, while hanging on to the old path is likely to lead to sharpened distributional conflicts. Third, sequencing of policy reforms matters: the best sequence is to open first, and undertake employment-reducing public sector reform afterwards. Arabic Abstract: