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REGIONAL AND TERRITORIAL DEVELOPMENT:
THE WORLD BANK’S EXPERIENCE
History making Policy
The political economy of spatial policy
in the Middle East and North Africa
Alex Kremer
Middle East and North Africa Region
Sustainable Development Department
European Commission’s “Open Days”
Brussels, October 8, 2008
The World Bank
We think of a cycle of economic
agglomeration…
enterprises
move in
agglomeration
efficiency
economies of
location
Policy response
• Explicit policies
• Economic
incentives
• Poor track
record
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What if we add politics ?
• 2008-9 World Bank study on Spatial Inequality in
Middle East and North Africa
• A response to politicians’ concerns : spatial
inequality
= migration to the cities,
= urban unemployment,
= religious radicalism
= political opposition
= a colonial vestige
• How to give good economic policy advice that
still takes account of political concerns ?
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Does spatial history …
• C19th – 1950s: Limited geographical spread of
colonial settlement. Investment concentrated in
port cities and administrative capitals.
• Post-independence: consolidation of unitary
administrations on governorate model.
*
interior
ministry
governor
governor
sector
ministry
sector
directorate
sector
directorate
sector
ministry
sector
directorate
sector
directorate
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… tell us where we are ?
• 1960s-70s: state-led industrialisation strategies:
regional and metropolitan preferences.
• 1990s-2000s: fiscal constraints undermine
governments’ ability to guarantee livelihoods:
perceptions of exclusion from growth.
migration
urban unemployment
urban opposition
political demand for
urban/metropolitan
subsidies
regional transfers as
a political
strategy
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Bank
In Egypt, people feel left out of growth …
• Male youth unemployment rate
• 21% in 2002
• Since 2006 …
• Real GDP growth 7%
• Real wage fall
1%
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‫… ‪… and there is spatial inequality‬‬
‫معدل الفقر‬
‫البحر المتوسط‬
‫‪rate‬فقيرا‬
‫االقل‬
‫‪Low poverty‬‬
‫الفقيره‬
‫دمياط‬
‫بورسعيد‬
‫‪Medium‬‬
‫االكثرفقيرا ‪High‬‬
‫كفرالشيخ‬
‫الدقهلية‬
‫الغربية‬
‫االسكندرية‬
‫الشرقية‬
‫البحيرة‬
‫المنوفية‬
‫االسماعيلية‬
‫القليوبية‬
‫شمال سيناء‬
‫القاهرة‬
‫مطروح‬
‫السويس‬
‫جنوب سيناء‬
‫الفيوم‬
‫الجيزة‬
‫بنى سويف‬
‫المنيا‬
‫أسيوط‬
‫سوهاج‬
‫قنا‬
‫مدينة األقصر‬
‫البحر األحمر‬
‫الوادى الجديد‬
‫البحراالحمر‬
‫أسوان‬
‫‪The World Bank‬‬
‫‪Rural person 2 ½ times‬‬
‫‪More likely to be‬‬
‫‪below poverty line.‬‬
‫´‬
… but is it the squeaking wheel …
75%
70%
65%
60%
500,000
and
more
50,000100,000
size of town
20,00050,000
10,00020,000
5,00010,000
Source: World Values Survey
2,0005,000
2,000
and less
confidence in government
Political support for government is weakest in large cities.
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… that gets the oil ?
 Implicit taxation of farmers until
1990s:
forced deliveries (rice)
.
and low prices (cotton).
Govt transfers as % of expenditure 02/03
94
 Central transfers to
governorates not compensating
for differences in tax base.
 Local govt share of spending
22% to 16% 1996/7 to 2005/6.
 Sanitation coverage. Cairo
98%. Qena 10%.
90
%
 36% of government spending
on energy subsidies (2006).
92
Govt transfers as
% of expenditure
02/03
88
86
84
82
0
2000
4000
GDP per capita USD ppp
01/02
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And we have a politico-economic cycle
migrants
move in
metropolitan
spending
bias
enterprises
move in
agglomeration
metropolitan
political
demand
efficiency
economies of
location
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“Spatially-blind” policies that might erode the
politico-economic cycle
Reforming public fiscal and administrative systems and structures
Addressing the social motivation for migration
Making government more accountable to provincial populations




Letting farmers benefit from high world prices;
Administrative deconcentration;
Bottom-up planning of local investments;
Improve quality of provincial public health and education
facilities;
 Converting commodity subsidies to targeted social
programmes.
 Giving provincial businesses adequate access to officials
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THANK YOU
[email protected]
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