• Enhancing Economic Freedom in the Arab World: Learning from Success Stories

    Sunday 16th May 2004 - 8:30am - 9:45am

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  • Enhancing Economic Freedom in the Arab World: Learning from Success Stories


    World Economic Forum in Jordan 2004

    "We know now that many other beneficial social and other outcomes result from economic reform," said Fred McMahon, Director, Center for Globalization Studies, The Fraser Institute, Canada. "If open voluntary markets are established as a prerequisite, we inevitably see natural evolutions of democracy through transactions and trade."

    But how is freedom established? Which obstacles block it? What can stakeholders do to overcome them?

    To tackle these issues, participants drew inspiration from their own experience as well as from such diverse and authoritative references as Amartya Sen s Development as Freedom, Hernando de Soto s The Mystery of Capital, Milton Friedman s Capitalism and Freedom, and the Koran.

    "Friedman used to say the solution was to privatize, privatize, privatize," noted McMahon, "but he later corrected himself to say that nothing would work without the legal reforms to make it possible." For that rule of law to take root, McMahon concluded, "people need ownership reaching back to their own secular and Islamic legal system. They need to adapt these codes to a changing world with separation of powers. And they need to know that the law is a protective tool of the people, not an oppressive tool of the state."

    Excessive, confusing and incompetent regulations are real obstacles, said Raymond Lim Siang Keat, Minister of State, Ministry of Foreign Affairs & Ministry of Trade and Industry of Singapore. But several creative approaches could help pry open bureaucracies and breathe in economic freedoms. "One is to develop pro enterprise elite panels to review what rules are obsolete every three years. Elsewhere, a standing committee is made up of pro enterprise partnerships to arbitrate business licenses to operate. And a third element is a website to ensure the support of all stakeholders and government officials. Then institutionalize these approaches across the board to keep them independent from government."

    Oversight, transparency and deliberate speed are essential to build trust through the transitions, cautioned Farouq Zuaiter, General Manager, Palestine Development and Investment (PADICO), Palestinian Authority. Taxation must be structured to meet the needs of a nation, such as benefiting capital gains to spur investment. Both private sector and government should take quick decisions. Above all, "privatization needs to be done fairly and openly. Some countries undervalued public assets before selling them off and deprived the people of the capital they deserved."

    Access to capital sounds like a straightforward issue, said Basil M. Al Rahim, Managing Director, MerchantBridge, United Kingdom. "But in this part of the world, it s not so simple. Capital flows are not sound when the political environment is not stable, for in those conditions people just want to take the money and run." His working group highlighted "the difference between proper regulatory environment and the obstacles of red tape." The latter burdens Egypt; Dubai lacks the former.

    Amartya Sen defines development as a process of expanding the real freedoms people enjoy. "In his analysis, slavery at its core is no more than the denial of access to an open labour market," observed Augusto Lopez Claros, Chief Economist and Director, Global Competitiveness Programme, World Economic Forum. "We need to remove such obstacles, from poverty to pollution, that obstruct the fundamental human freedom to enjoy and enter markets."

    That means giving people the right to choose, concluded Salem Ben Nasser Al Ismaily, Director, Oman Oil Company, Oman. "If you have a gun to your head you will change. But if you don t buy into the decision making process, you will go right back once that gun is removed."

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    World Economic Forum in Jordan

Moderated by

  • Salem Ben Nasser Al Ismaily Salem Ben Nasser Al Ismaily
    Special Envoy, Government of Oman

    Degrees in Telecommunications, Liberal Arts, Industrial Engineering, Business Administration, Manage...


  • Bassem Awadallah Bassem Awadallah
    Chief Executive Officer, Tomoh Advisory, Jordan

    Dr. Bassem I. Awadallah is the CEO of Tomoh Advisory, a Consultancy company based in Dubai. A Jordan...