Middle East / North Africa and the Millennium Development Goals ...

Middle East / North Africa and the Millennium Development Goals
financial system. However, if the developing countries are to benefit from
such a system, their own trading and financial systems will also be open,
rule-based, predictable, and nondiscriminatory.
Many of the countries in the MENA region are far removed from meeting
this condition. Their financial and product markets are clearly overregulated
and protected against potential market entrants by legal regulations
and informal barriers. The actors affected by this include both foreign suppliers
and potential competitors of established domestic firms. Anyone interested
in investing or producing goods in these countries must be prepared
to submit to protracted, complicated, and cumbersome approval
processes that entail high costs and risks. Until the end of the process it is
impossible to predict whether or not an application will be approved. And
even then, new stumbling blocks may turn up or be placed in the path of
an investor (Loewe et al. 2006; UN 2004a, 33). In addition, intellectual
property rights are not adequately protected. Competition laws are either
weak or simply ignored – assuming that there are any in the first place. In
legal disputes it is difficult to predict how courts will decide, i.e. whether
they will apply the law and in what ways they may interpret them. All this
means uncertainty and high transaction costs. The result is that in many
MENA countries hardly any investments are made in productive capital
assets. Savings are invested almost exclusively in real estate or financial
capital, or they are moved abroad (Bennet 2003; World Bank 2003).
The main beneficiaries of these opaque bureaucratic structures are a small
group of persons with good connections to political decision-makers. Most
applicants are simply unable to predict whether or not the administrations
responsible will approve their applications. Decisions often depend to a
very large extent on an applicant’s situation, social status, and personal
connections (GTZ 2003, 4; Loewe et al. 2006).
In view of the fact that within the authoritarian context given in the
MENA countries, all political institutions are dependent on centers of
power, there is no instance that could review whether nor not decisions are
in conformity with given rules, or indeed that could correct and penalize
infractions of these rules. Corruption is widespread, political and legal decision-making
processes are cumbersome, and economic actors are unable
to rely even on written legal norms (Loewe et al. 2006). The Arab Human
Development Reports point in unmistakable language to these governance
deficits (UNDP / AFESD 2002; UNDP /AFESD 2004).
German Development Institute 89