September 18, 2020
Liberalizing capital, trade, and labor markets are keys to accelerating post-pandemic recovery in Middle East
At a private CEO Dialogue on post-pandemic challenges and opportunities in the Middle East—convened by the Atlantic Council’s Rafik Hariri Center for the Middle East in partnership with the World Government Summit and Majid Al Futtaim—there was agreement among participants that the region presents appealing demographics for economic growth and that the pandemic has underscored the need to accelerate economic diversification.
The CEO Dialogue held on September 10 brought together a group of approximately forty senior private sector leaders with interests in the Middle East, as well as the United States and regional government officials. A key point made at the discussion is that the region has untapped potential that presents a substantial opportunity for entrepreneurial and innovative endeavors. Likewise, the Middle East has a sophisticated investor class and a rising entrepreneurial community. Many in attendance stressed that a fundamental shift is needed and that international investors should see the region as a market to deploy capital rather than simply as a place to extract it. In a poll conducted during the meeting, the majority of participants (58 percent) said that liberalizing capital, trade, and labor markets are the policy actions that would be most effective in accelerating the post-pandemic recovery. (The poll was conducted on September 10, 2020 with a sample size of 38 respondents.)
Key insights from the meeting included the need for regional economic integration to allow for companies to consolidate and scale effectively in order to compete on a global level. Sustainable commitments between nations in the Middle East would also enable them to reap the opportunities present in the region as a whole. Just as importantly, taking steps to more closely link regional economies and remove economic barriers would drive more entrepreneurship. These actions will lead to a more competitive and open market that will result in job creation. Indeed, a majority of participants polled at the event (40 percent) indicated that integrating regional economies would have the most significant impact on long-term regional job creation.
Private sector leaders in attendance highlighted the entrepreneurial set of opportunities the region presents, as well as the importance of investing not just financially in the Middle East, but also in terms of expertise, training, and upskilling. The importance of the digital transformation currently underway was also discussed and a majority of participants polled (65 percent) believe that artificial intelligence and machine learning have the potential to have the greatest impact on the region out of several major technological trends. Participants also emphasized that building digital infrastructures and capacity are essential for capitalizing on the region’s opportunities.
The importance of strengthening the private sector was also underscored. Government officials noted that governments cannot solve the region’s economic and human development challenges without a robust private sector and that more must be done to create ecosystems where the private sector can flourish. Participants also noted that harnessing the creative and productive power of the region’s youth is an area of untapped opportunity, especially since the region is blessed with favorable demographics. Participants agreed that more concerted efforts are needed to foster public-private partnerships that create pathways to entrepreneurship and employment opportunities for the young and tech-savvy population in the region.
The economic benefits of increasing women’s participation and leadership roles in workplaces throughout the region was another key theme. Some countries in the region are making significant progress on these efforts and private sector representatives stressed that investors increasingly want to know that their financing supports women’s economic empowerment, whether through employment, training, or leadership opportunities.
Similarly, the role of environmental, social, and corporate governance factors have become paramount in investment decisions. Private sector representatives noted that investors increasingly want to understand the sustainability credentials of investee companies; indeed, this is now a pre-requisite for investment allocation.
While the meeting identified numerous areas of opportunity in the region, a majority of participants (50 percent) indicated that they believe it will take between twenty-four and thirty-six months for regional economies to recover from the economic decline caused by the coronavirus pandemic. Government officials and private sector leaders affirmed the importance of economic diplomacy and multilateralism to address shared challenges that impact everyone due to the connectedness ushered in by globalization.
Stefanie H. Ali is deputy director of empowerME at the Atlantic Council’s Rafik Hariri Center for the Middle East. Follow her @StefHausheer.
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