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Energizing the Mediterranean economies: transitions, global competition and the search for opportunities

    • Hammamet (Tunisia)
    • 15 June 2012

          The Mediterranean region is very diverse and simultaneously presents elements of close interdependence: the economic crisis of the past few years has shown that each country reacts to the challenges and opportunities on the basis of specific institutional and social features, even in the presence of important contagion effects. The political transitions in some Arab countries, starting with Tunisia and Egypt, confirm these twin tendencies whereby endogenous and local factors interact with regional and international ones.

          From an overall economic perspective, the grave difficulties of the eurozone are certainly having a negative impact on the investment climate in the region, while at the level of government relations the focus is obviously on intra-European matters. This does not favour possible initiative in support of growth and multilateral cooperation which could contribute to consolidating the political transitions in the Arab countries. At the same time, programs such as those managed by the World Bank and other international organizations and agencies are continuing, and can offer a series of best practices and methodologies that are well established and practically useful.

          A positive effect of the ongoing transitions that has already been verified is better access to data on economic trends, thanks to increased transparency. An additional way for the newly elected governments to mark a breakthrough is by removing a number of serious distortions in the functioning of markets, which have long damaged growth and especially a more balanced distribution of wealth. The state should consider itself an indispensable regulator more than an actor with a direct involvement in the country’s economic life.

          The key priorities for balanced and sustainable growth are productive diversification – in order to provide a wider basis to development processes – and market integration – to be also encouraged by the action of agencies aimed at supporting joint trans-border projects.

          A central question for investors is naturally that of political-institutional stability in the countries of the Southern shore: a certain degree of fluidity is inevitable in the present circumstances, but authorities can at least send positive signals by indicating with clarity a policy roadmap in terms of reforms and resource allocation.

          A grave shortfall to be addressed through targeted policies – long term by nature – is that of specialized professional skills in some key sectors. In this perspective, first-hand experience of collaboration with companies from more advanced countries is a precious asset. Human capital is indeed a resource to be cultivated with great commitment in order to promote constant innovation, also through the rules and incentives that form the overall economic framework: innovation is a system encompassing all of the above factors, together with access to credit.

          In the energy and infrastructure sector, the region suffers from a low level of interconnectivity, particularly along its horizontal axis: broadening the grids and therefore the markets would make production and distribution more efficient.

          Although it is wise to invest in green energy, it is equally important to exploit more fully existing resources and apply technologies that are already available at affordable cost and which have the potential to significantly improve energy efficiency. In this sector, as well as in others, even just a few success stories could stimulate a spontaneous process of emulation, combining best practices and the ability to adjust to local circumstances.





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