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2018 OECD Economic Surveys: Tunisia 2018

Economic Assessment

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Tunisia has experienced strong economic and social progress in recent decades and, more recently, a successful democratic transition. The convergence process has slowed down, however, due to the low level of investment since the early 2000s, while regional and labour market inequalities have persisted. Since 2011, the external and public debt-to-GDP ratios have risen sharply. To put them back on a sustainable path, structural reforms that can sustain growth and competitiveness are needed. In order to boost business investment, regulatory and administrative constraints - including the many licences, permissions to operate and administrative authorisations, pricing constraints and restrictions on competition in certain sectors - need to be reduced. Strengthening Tunisia's competitiveness in global value chains through trade facilitation measures and greater efficiency of logistics services is also key. Encouraging women's participation in the labour market, adapting training to the needs of employers and reducing social security contributions on payroll will help create quality jobs. A new regional development policy, emphasising the specific assets of each region around the development of urban centres, is needed.

SPECIAL FEATURES: INVESTMENT; EMPLOYMENT AND REGIONAL DEVELOPMENT

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Reviving investment

Since the early 2000s, the investment rate has declined, driven by the decrease in business investment. Its level is low compared to some other emerging countries. The main factors are: excessive product market regulations, associated with complex administrative procedures, unpredictable taxation, increasing difficulties for the passage of goods through customs and their maritime transport, and a financial system that is unfavourable to young companies and fast-growing ones. Removing these constraints is essential to boost business investment and, with it, productivity, job creation, competitiveness and the purchasing power of all Tunisians. The new Investment Law, by simplifying the licensing regime, is a step in the right direction but will need to be fully implemented and accompanied by further reforms. It would also be desirable to better target government actions to support investment, including a systematic evaluation of the impact and beneficiaries of tax incentives, particularly those for housing. At the same time, there is a need to better manage existing infrastructure and prioritize infrastructure projects.

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