Chapter 1

Chapter 5
Challenges of globalization
In the mid-1980s, Tunisia chose to adopt a market-oriented ment liberalization. Although the Tunisian economy has
development strategy. Since that time, the Government has become stronger and more sophisticated since the late
undertaken deficit reduction measures, tax reforms, some 1980s, the external environment has not stood still. The rest
trade liberalization, and structural reforms in the areas of of the world is also changing rapidly, so that countries like
pricing policy, deregulation, and financial market develop- Tunisia need to liberalize their economy with determination
ment. Tunisian leaders have followed a consistent direction, and in a timely manner to maintain their growth prospects
building up credibility over time. Their gradual, yet timely and enhance their international competitive position.
approach has resulted in an impressive macroeconomic per- * The state needs to decrease further its size and role in the
formance and significant social advances which are critical economy, strengthen its actions in the provision of public
ingredients for higher long-run growth. goods, and encourage a higher level of private investment-
This report has focused on the policies that will influence domestic and foreign. Further deregulation of public sector
the future growth and development of Tunisia. The report monopolies and an acceleration of the privatization proanalyzes
the areas expressed by the government as being gram would promote productive and allocative efficiency in
strategic for Tunisia's future: achieving higher rates of the economy and enable the Government to focus on the
growth in the context of sustainable environmental man- enforcement of regulations that encourage profitable activagement
and the enhanced competitiveness of the economy ities, protect the public, and preserve the country's natural
in a global market environment. In addition, the report resources.
includes key issues raised by other groups in Tunisia (the pri- * Environmental constraints mean that further adjustvate
sector and members of the academic community) on ments in growth plans must take place, particularly in agrithe
role of the state in the economy, the development of the culture and tourism. By undertaking the necessary
financial sector, and the adequacy of the education system adjustments now, the Government will be in a better posiin
meeting the human capital requirements of the twentyfirst
century.
Strategic choices in the 1 990s
tion to implement these reforms gradually.
Pace of reform
A general recommendation throughout the report is to
After nearly a decade of reform, and as the country embarks implement the remaining reforms in a timely manner. This
on a closer commercial relationship with Europe, the is consistent with the government's stated objective of
Tunisian authorities should consider undertaking a more increasing the GDP growth rate from 4-5 percent to 6-7
decisive and clear completion of reforms. The next one or percent. A slow approach to reform is more consistent with
two years may well provide a unique opportunity for Tunisia keeping the growth rates at the respectable current levels.
to use the momentum (and financial assistance) from the Gradualism, however, has two problems that make even
trade agreement with the EU to absorb higher transition maintaining growth at its current rates difficult. The first
costs and promote a real international integration of the problem is related to international markets. Many develop-
Tunisian economy. Three key messages emerge from the ing countries are experiencing rapid reform, thus becoming
report's analysis that present Tunisian authorities with formidable contenders with whom Tunisia will have to comimportant
choices: pete in export markets and in attracting capital flows from
* The pace of structural reform needs to move forward the developed world. The second problem refers to the
more decisively, particularly in the areas of trade and invest- domestic economy. Further reform will benefit the country
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