Chapter 1

taken in Tunisia (merchandise transport, some services, needs to be opened up to local private and foreign
tourism), the outcomes have generally been very positive. It investors that can bring state-of-the-art technology, comis
difficult to show precise efficiency measurement changes petitive prices and reliable services enabling faster and
for Tunisia, because privatization has been limited, but cheaper communications and transport links with the rest
extensive work has been done in other countries which of the world.
strongly supports positive results. Widespread private own- * Commencing the divestiture process of the public sector
ership combined with property laws, clear land titles, trans- banks (which account for 70 percent of the banking sector's
parent regulations, and a well-functioning financial system assets) will speed up the restructuring of these banks and
provide the building blocks that make market-oriented help ensure fundamental changes in the way the banks and
economies function. enterprises conduct business. Private ownership will
A key finding from studying structural reform and improve the banking sector's efficiency-provided core prigrowth
(chapter 4) is that economic growth is maximized vate shareholders are found that can appoint key board
when the incentives to invest in physical and human capi- members and fill senior management positions to run the
tal as well as in technological innovation are determined by banks after divestiture.
free market forces. Governments assist this process by pro- * Further public sector disengagement in agriculture is
viding macroeconomic and political stability, a clear regu- needed, particularly in the trade and marketing of, for examlatory
environment, and public/social infrastructure. In ple, meat, milk, sugar, wheat, and olive oil. The size of the
Tunisia, regulatory reforms, including accreditation and state's operations in these activities, combined with its storsupervisory
policies, can speed up the entrance of private age facilities (and some continued price controls), make
investors in many different service activities that have been effective private competition difficult. With the expansion
traditionally dominated by the public sector (for example, of commercial agriculture, many services currently provided
higher education, vocational training, medical services, by the state (extension, animal health, and research) take on
agricultural extension, and veterinary services). Shifts in a private good character for which private extension and
public/private financing policies need to be introduced so cost recovery are more suitable. The state, as a major
that limited public funds are used to finance priority areas landowner, should also expand the program of leasing state
with high social and economic returns, for example, agricultural lands and rethink the costs and benefits of sellincreasing
completion rates of nine years of basic education ing state land to the private sector (in conjunction with agriand
further improving preventive health care. Private
financing needs to increase in areas where private benefits
cultural zoning regulations).
are high, such as medical expenses (with public/private
insurance policies) and tertiary education (with loans and
Growth and environmental sustainability
scholarships for the poor). Tunisia has already made good progress in incorporating
environmental concerns in its development plans and
Privatization and deregulation growth objectives. The Government is putting in place several
policies, including pricing policies, that incorporate the
Refocusing the role of the state through an acceleration of economic value of resources, minimize haphazard coastal
the restructuring and privatization of public enterprises zone planning, and take into account the fiscal and finanaccompanied
by deregulation measures will have a critical cial consequences of erosion, water scarcity, and pollution.
impact on efforts to upgrade the productive and allocative The government needs to take the lead in integrating
efficiency of the Tunisian economy. Undertaking these mea- growth objectives with sound environmental management
sures in three strategic areas of the economy (transport and by balancing the trade-offs between different activities
telecommunications services, banking, and agriculture) is through appropriate pricing policies, using incentives and
an integral and critical part of any strategy to enhance the penalties to reduce pollution, decentralizing monitoring
country's competitiveness. and enforcement activities, and promoting the economic
* The public sector's traditional control of telecommuni- analysis of the costs and benefits (including externalities)
cations, maritime and air transport, and port services of natural resource use-particularly of land and water.
CHALLENGES OF GLOBEALZAnON 53