Arab states risk locking their exploding populations in poverty and eroding limited natural resources if they fail to deepen economic reforms and break out of a two-decade slump, a new international survey said. Reuters' Middle East economics correspondent Mona Megalli reports from Cairo
The Arab World Competitiveness Report, unveiled by the Geneva-based World Economic Forum (WEF), acknowledged that the Arab world had made some progress with macroeconomic and structural reforms.
But it said privatisation, trade and investment liberalisation needed to be sustained to bear fruit.
"The Arab countries of the Middle East and North Africa are among those at considerable risk of being left behind," it said.
The 400-page report by more than 20 authors echoes some of the findings of a hard-hitting UN study in July that held out little hope for improvement in Middle East development without more political freedom, the empowerment of women and greater public access to information and good quality education.
Despite Arab oil wealth, only sub-Saharan Africa had performed worse economically over the past 25 years, according to the WEF, which organises the annual Davos meeting of political and business leaders.
Higher growth rates were particularly necessary with the region's 290 million population set to double in 30 years.
"Assuming that the population keeps growing at the current rate, you need (economic growth) of five to six per cent a year just to keep unemployment from growing," economist Peter Cornelius, one of the report's authors, told journalists in Geneva.
The report was officially presented in the Swiss city after parts of it were released earlier in Cairo.
Population growth figures "are alarming and pose substantial challenges for the Arab world, especially when the limited capacity and availability of land and the scarcity of water resources are taken into account", the report said.
Policy-makers concentrating on resolving international conflicts and tensions, while providing macroeconomic stability and better institutions, must broaden their approach to generating needed economic growth, Cornelius said.
"The region has for too long pursued a one-dimensional growth strategy that is far too reliant on capital accumulation as the single engine for growth," he said.
The poor quality and inefficiency of domestic investment overwhelmed its ability to promote growth.
Large public sector investments have produced an inefficient infrastructure, while banks have failed to channel private investments productively, the report said.
The stage for economic growth can be set by deepening financial markets, liberalising investment, ensuring better governance and less corruption and improving education.
Other recommendations included encouraging entrepreneurs, innovation and the transfer of technology. Improving the efficiency of public and private sector investments could also feed growth, the report said.
Recognising that standards of living were tied to the quality of the natural environment, the report warned Arab nations that air pollution, vehicle emissions, water scarcity, population growth and urbanisation posed serious environmental problems.
High levels of child mortality and illiteracy among females and their lack of empowerment hobbled the region's best agents for social development - women, it said.
Trade association agreements tying four north African Arab countries to the European Union could be used by Egypt, Morocco, Algeria and Tunisia as vehicles of reform to anchor painful reform decision.