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Survey of Economic and Social Developments in the ESCWA Region 2007-2008

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This year’s Survey builds on the right to development themes adopted in previous issues and focuses on two significant concerns that have long constrained the right to development in the United Nations Economic and Social Commission for Western Asia (ESCWA) region: capital flight and unemployment. The publication illustrates recent economic trends and developments in the ESCWA region, capital flows to the region, discusses rights-based employment creation, and gives synopsis of integrated social policies. It concludes with a rights-based macroeconomic policy for the ESCWA region.

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Rights-based employment creation in the ESCWA region

The present bout of economic growth, supported by high oil prices, has not significantly affected unemployment levels in the ESCWA region, particularly youth unemployment. These levels continue to remain crucially high – even against most standards of measure – and rank among the highest of all regions of the world. A variety of reasons have been offered to explain the persistent problem of unemployment in the ESCWA region. Existing literature on the problem ranges from descriptive reviews of striking differentials between population and economic growth rates to slightly more complicated causal accounts of the alleged mismatch between labour supply and demand due to insufficiencies in education and training. Underpinning both approaches is the view that Government inefficiency has contributed to a wide range of macroeconomic dislocations in ESCWA member countries. One view maintains that this has happened because of excessive protectionism, misallocation of resources and the introduction of restrictions to the workings of the market, as if markets alone could be relied upon to resolve spontaneously the large disequilibria in the ESCWA labour markets. However, when compared to other developing regions, labour markets in the ESCWA region are not as rigid as they may appear. More importantly, with more than half the regional GDP originating from oil or geopolitical rents, employment generation has not been able to offset the rising supply of labour, in large part because of the absence of labourintensive or knowledge economies and dynamic productivity growth. Unemployment is in large part due to insurmountable initial conditions related to an overdependence on primary activities, such as natural resource extraction, but which is veiled by cyclical upswings generated by one particular sector. The rentier-supported system in this context produces few jobs and those left outside the system, on average half the social structure and redressing an anaemic labour share, especially in the absence of universal unemployment insurance coverage and adequate welfare policies.

English

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