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THE single vital issue facing the economies of the Middle East and North Africa (MENA) region is the challenge of equipping its people with good jobs.
Even in the oil rich states, youth unemployment is on the rise, while economic diversification programmes will take many years to bear fruit.
For the Middle East, the 1990s was “a lost decade” from the point of view of employment, with population growth of 3 per cent cancelling out average economic growth of 3.6 per cent across the region, notes the World Bank.
Against this background, the Arab World Competitiveness Report 2007, which ranked Bahrain fourth among GCC countries, sought to identify tangible solutions to the constraints that limit faster growth. It also proposes strategies for enhancing the competitiveness of selected sectors that have been identified as having high potential.
Given the high unemployment in many of the Gulf countries and the need to diversify their economies, educational outcomes are particularly worrying.
The challenges to improving education differ from country to country. While some countries still struggle with high illiteracy rates, others face the task of better aligning educational systems with the needs of a competitive economy.
If left unaddressed, these shortcomings will alter the future development path of the respective economies, the report says.
High unemployment and a growing population are increasingly putting pressure on governments in the region to overhaul the current labour market model, which in many countries is highly regulated and often relies heavily on the public sector and on migrant workers.
More flexibility in employment regulations and increased focus on meritocracy and professional management would be desirable steps in the right direction.
Notwithstanding record oil prices, Bahrain’s economic reform programme remains focused on diversifying away from oil, privatising and stimulating domestic and foreign investment by transforming the government’s role from that of operator to that of regulator, removing barriers to market entry and cutting red tape.
The effects of high oil prices and the various reform packages currently being implemented are evident in Bahrain’s most recent GCI rankings. Bahrain’s macroeconomic rank is 13 out of 128 countries; its infrastructure and institutions rank 40th and 44th respectively. Bahrain’s markets are efficient (40th). However, Bahrain confronts significant challenges. This is particularly true as it transitions to an innovation-driven economy where the sustainability of its economic growth and its competitiveness will depend on its ability to develop and commercialise innovation and to upgrade business practices, the report notes.
This ability depends on two interrelated factors: Bahrain’s capacity to innovate and the strength of its educational system. These are the two factors on which Bahrain ranks poorly. In innovation, Bahrain needs to upgrade its capacity in university-industry-research collaboration (where it now ranks 124th), its capacity for innovation (122nd), the quality of its research institutions (120th) and company spending on research and development (119th).
In order to meet these challenges, Bahrain must have an adequate educational system. Bahrain’s secondary enrollment levels are relatively high (27/128), but graduates currently fail to meet the needs of the business community, which has consistently cited an inadequately educated workforce and poor work ethic in the national labour force as two of the most problematic factors for doing business in the country.
To address workforce education, a comprehensive educational reform programme is under way geared towards
upgrading primary, secondary, and tertiary education. This programme includes upgrading curricula and creating new institutions to ensure that training meets labour market needs and is of a standard high enough to create the capacity to innovate within the economy. Others include a quality assurance regulator and extensive teacher training. Labour market reform has significantly reduced market restrictions in an effort to ensure that adequately trained and experienced labour — both Bahraini and foreign — is available to meet labour market demand. Despite considerable challenges, Bahrain is clearly making significant
efforts to build its capabilities to move to the innovation-driven stage of its development and improve its
competitiveness.
But, in order to sustain the current wealth beyond the oil reserves and become a truly innovation-driven economy, the country will have to make more efforts to improve education and enhance innovation.
This approach of dismantling barriers while providing the environment for the development of specific sectors has proven successful in some countries in the region including Bahrain and the United Arab Emirates. The report sought to assess how such successes can be emulated by other regional economies.
A number of countries in the region still struggle with macroeconomic imbalances.
The ball is now in the court of the GCC countries. With current account surpluses from high oil prices predicted to remain high, would they spend on raising their competitiveness levels by improving education or would they squander the windfall on imports like they did during the last oil boom?
Improvement in the quality of basic education, acceleration of e-governance projects to promote transparency and lessen corruption and infrastructure investments by the private sector should top their list to improve overall competitiveness.
Talking Business with
By K S Sreekumar
sreekumar@tradearabia.net
