Why governance and investment matter for development

Secretary-General of the OECD

The world is going through hard times. Though there are some signs of an economic recovery, global confidence remains fragile. From the economic and social crisis to climate change, natural disasters and conflict, rarely in modern history have we faced such a testing period.

The crisis has taught us many lessons, about our policies, our practices and our ways of life. But if there is one lesson that stands out, it is the importance of international co-operation to help us overcome the challenges we face.

Even before the crisis struck, the MENA region faced difficulties, but with growth and investment reeling from the global downturn, the situation has become urgent: millions of new jobs will be needed for the MENA region's expanding population over the next decade. With annual growth rates that averaged 6% in previous years set to fall to closer to 2-3% this year and foreign direct investment inflows into parts of the region plunging by an estimated 30%, governments need to work hard to attract investment by domestic, regional and international companies.

One underlying cause of the challenges MENA countries face can be traced to administrative and governance processes, which must be addressed to release economic potential, alongside action on education and business development. But though a crisis is a good time to reform, it can also fuel resistance to change. The MENA-OECD Initiative on Good Governance and Investment for Development aims to help support reform-minded governments by sharing best practices from the region and beyond.

The paradigm is simple: ensuring stronger and better governance and a supportive business environment that includes robust education and infrastructure will bring more investment and improve the development prospects for the region as a whole.

However, translating the paradigm into reality is not easy, which is where the OECD can help. We have a rich trove of experience to share in all the key areas for action, from public and corporate governance, through human resource skills and women's issues, to capital investment, tax administration and policies for small and medium-sized enterprises. We are honoured to put this knowledge at the disposal of the MENA countries. Our focus has been on improving governance and strengthening investment policies, as these are prerequisites to unleashing the MENA region's considerable development potential. A results-oriented programme, the MENA-OECD initiative helps to share knowhow on best practices and lessons from past reforms. We mobilise trusted OECD tools, such as peer review and civil society dialogue, and promote innovative solutions for specific circumstances. Our collaborative work is starting to show results. Take corruption, which has affected investment in the MENA region at some cost to development. Thanks to the involvement of the OECD, among others, now several countries have begun cleaning up their public procurement practices and are creating legal structures to combat bribery of public officials.

Under the Good Governance for Development initiative, MENA and the OECD are working together to help strengthen civil service performance and public service delivery in the region, and to improve such areas as e-government, public-private partnerships, legal enforcement and civil society relations. The fruit of this effort is reflected in the spread of information and communication technologies within administrations, for instance, and in more effective personnel policies, including empowering women in the civil service.

Meanwhile, the Investment Programme is helping to spur progress in areas such as investment rules, tax policies, small and medium-sized business support, corporate governance, sector diversification, trade, skills and responsible business conduct. Some of this work focuses on technical issues, such as providing drafting support for corporate governance codes and training officials on double taxation treaties. The programme has also developed regional guidelines for free economic zones, and has adapted the OECD Principles for Private Sector Participation in Infrastructure to the MENA region. And together with the governance initiative, the Investment Programme provides a forum to enhance contact between policymakers and other stakeholders.

Governance and investment policies will lead the agenda at the MENA-OECD ministerial conference at Marrakech, Morocco on 23 November, which will be held under the high patronage of His Majesty the King Mohammed VI and hosted by Prime Minister Abbas El Fassi. The ministerial meeting will be preceded on 22 November by two important fora on governance and business, as well as a summit of women business leaders.

The countries of the Middle East and North Africa have been at the economic and technological forefront of civilisation throughout much of history. Today, they are at a crossroads in their development. With strong co-operation combined with the right policies and determined approaches, the MENA region has every prospect of playing an increasingly leading role in helping to forge a stronger, cleaner and fairer world economy for all.


© OECD Observer, No. 275, November 2009

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