KUWAIT: Chief Economist of the Arab Planning Institute, Dr Belkacem Al-Abbas, emphasized that the key to establishing a sustainable Arab economy lies in reforming government institutions and enhancing their transparency. He asserted that development in Arab countries is unattainable without instituting significant reforms. Dr Abbas delivered these remarks during a seminar organized by the Arab Planning Institute on Thursday titled “Arab Development and the Necessities of Institutional Reform,” coinciding with the ongoing meetings of the institute’s board of trustees in Kuwait.

Dr Abbas highlighted the substantial disparity between the effectiveness of government institutions in developing countries, particularly in the Arab region, and their counterparts in developed industrial nations. He stressed that economic development and market flexibility cannot be achieved without addressing the administrative inefficiencies and lack of transparency prevalent in these institutions.

The economist noted that a vast majority of countries worldwide struggle to achieve sustainable growth, with two-thirds of global income concentrated in developed nations, representing only 15 percent of the world’s population. This imbalance in the global economy, according to World Bank data, underscores the urgency for reform.

Dr Abbas pointed out that 3.1 billion people, constituting nearly half of the world’s population, reside in countries with well-performing institutions, contributing to a global income of around $60 trillion. In contrast, the remaining $40 trillion is distributed among the rest of the world’s population, indicating a persistent gap between developed and developing nations.

The chief economist attributed this divide to the flexibility and transparency of government institutions in developed countries, which have clear goals and streamlined procedures, as opposed to developing nations, including many Arab countries grappling with slow decision-making processes due to administrative laxity and corruption.

He emphasized that countries initiating institutional reforms are experiencing positive outcomes, such as political stability, economic prosperity, and the expansion of the middle class—a crucial factor in national development. Dr Abbas contended that poor institutional performance is the “root of economic and developmental underdevelopment in the world,” citing experts like the American economist Dani Rodrik, who believes that institutional reform is a more potent driver of growth than explanations like free trade and geographical factors.

Dr Abbas underscored that governance, law enforcement, and anti-corruption efforts within institutions have a direct and swift impact on GNP income, economic quality, financial and social stability, and overall national progress. He urged developing countries, particularly those in the Arab world, to conduct comprehensive evaluations of their institutions, making them more flexible and effective to align with the demands of the global economy. He emphasized that Arab nations possess the necessary human resources, wealth, and intellectual capital to be economically attractive but stressed the urgency of initiating reforms, stating, “The world will not wait for us.”.

The Arab Planning Institute, established in 1980, is dedicated to supporting economic and social development in Arab countries through various means, including building local capacities, research, advisory services, institutional support, development meetings, and publications. The institute comprises a diverse group of Arab experts and scientists contributing to the development of plans and comprehensive research studies on the Arab economy. — KUNA