What are the main factors and causes leading to the improvement or slacking of economic growth in the Arab region? This paper answers this question by examining few case studies, which in fact provide lessons expandable to the rest of the ESCWA region. In light of the turns and twists that happened both politically and economically in the region since 1975, the paper looks at three main areas which it considers to be vital key players in the economic performance:
total factor productivity (TFP)
By focusing on Egypt, Syria and Jordan, the analysis leads to a number of findings, which by their turn lead to a number of recommendations. In total, the paper finds that:
the drop in physical capital between 1980s and 1990s is the main cause of slow economic growth, since it was not balanced out with an equivalent increase in human capital
TFP was not the main factor responsible for economic growth in 1970s, however it was the main reason for relatively slower growth in 1980s and 1990s
in order of importance, the largest contributor to economic growth is accumulation of physical capital, followed by human capital which is followed by TFP
Based on this, the paper recommends that there is a pressing need to invest in qualitative improvements. GDP growth is doing fine quantitatively. Yet this should be coupled with qualitative measures, even if GDP growth does not grow much, or stays the same.
Secondly, countries should design policies to absorb the educated inflow into the job market. Besides working on educational policies, these countries need to integrate the educated influx into the system, instead of suffering from brain-drain. The government should then work on being instrumental in sustainable developmental policies.