Advantages And Disadvantages Of The Political Economy Of MEN
State ownership and privatization has been a debated subject in the MENA as it stems from the political and economic situation and the formation of state ownership of its regimes. In order to assess the advantages and disadvantages of privatization, it is important to identify reasons that affect the decisions behind privatization. According to the World Bank, successful reform needs to be politically desirable, politically feasible, and be credible with no policy reversals (World Bank, 1995). Moreover, if privatization is not in the government’s interest, it is likely that privatization will not be conducted.
Although the MENA region encounters many obstacles to sustainable and private sector development, the region has the capability to achieve economic growth. The abundant supply of human, financial and natural resources is available, although there is inefficient allocation of resources. Proper governance and strong institutions are needed in order to effectively execute policies that are aligned with public benefit. Due to the lack of genuine political commitment and efficient institutions needed for such reform, inefficiency of SOEs is common. According to Akoum, this is known as “state capture,” where the status quo is maintained and protected by those in power. Bortolloti supports these claims, and confirms that government’s decision to privatize is politically motivated (Akoum, 2012: …show more content…
Abdallah, R., Barry, C., Said, A., Vartanov, S. and Beal, M. 2012. The Textile Cluster in Egypt.
2. Akoum, I. 2012. The Political Economy of SOE Privatization and Governance Reform in the MENA Region. ISRN Economics, 2012.
3. Amico, A. and Hertog, S. 2013. State-owned enterprises in the Middle East and North Africa: engines of development and competitiveness OECD, 2013
4. Birdsall N. and Nellis J. 2003. Winners and Losers: Assessing the Distributional impact of Privatization. World Development, 2003
5. Galal, A. and El-Megharbel, N. 2008. Do governments pick winners or losers? An assessment of industrial policy in Egypt. Industrial Policy in the Middle East and North Africa: Rethinking the Role of the State, pp. 11--34.
6. Harik, I. F. and Sullivan, D. J. 1992. Privatization and liberalization in the Middle East. Bloomington: Indiana University Press.
7. Kinninmont, J. 2012. Bread, Dignity and Social Justice: The political economy of Egypt’s transition. Chatham House Briefing Paper April 2012
8. Kowalski, P., Büge, M., Sztajerowska, M. and Egeland, M. 2012. State owned enterprises: Trade effects and policy implications. OECD Trade Policy Paper No. 147
9. Meyer, K. 2002. Management challenges in privatization acquisition in transition economies. Copenhagen Business