July 26, 2005
Creating Opportunities - Liberalisation & MENA, The Micro Level
A small piece of news that I shall try to expand on, but after some little work on a Fund proposition. In the meantime, for comment and reflection.
The Moroccan business press reported an item that I would think most readers would pass over in boredom, but I find highly relevant to understanding why unemployment is so high throughout the MENA region and why liberalisation - domestic liberalisation even more so than to the global market, is so important for giving real opportunities to the populations here. And by doing so, providing alternatives to the ever more attractive nihilism of Salafist Takfiri ideology.
After such a build up, I am sure you're expecting something enormous. No, the press merely reported that by Administrative dictat the Wali of the Casablanca Morocco governate was suppressing business authorisation for small shops in favor of merely allowing "notification."
Trivial you say?
Not at all.
To open a small business (or any business), the process involve(d/s) getting government "authorisation" (including paying a fiscal fee, a stamp tax) to do so. This obviously create(d/s) no small opportunities for small government officials to extract rents (or in non-economist language, extort non-transparent bribes) from one and all, and above all from the poorly connected. A double rent, since obviously the well-connected can block new market entrants via corrupt officials. What purpose was served in this? Well, it keeps the club to the members certainly.
However, the new Wali has ordered that no longer is there an authorisation process. Rather one merely registers, with no discretion to the official. Pay the "notification" registry fee and away you go.
If this is applied as stated in the Circular, it will go a long way, although sadly only in one governate, to freeing up the economy. Small, trivial things like these authorisations can have an amazingly deadening effect on "weener sized" entreprenurial activity, which in developing economies is the majority of activity.
I close this brief note by noting that the much maligned (among ignorant anti-globo lefties especially) "neo-liberal" agenda from IMF and World Bank have helped motivate these changes. But as so typically in situations where the benefit is not immediately obvious, and no one comes out in the streets, this goes unremarked. Only when cockamamie, well-fare reducing subsidies bring people into the streets do we get comment (and usually ill-informed). I note in closing that my comment on subsidies is not to all subsidies, which sometimes have a place, but cockamamie ones like petrol subsidies.
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Was anything like this "reformed" in Iraq while you were there?
Posted by: matthew hogan at July 26, 2005 05:48 PM
Iraq was ... to put it mildly in a whole different world. They were working on reformed commercial code etc, but that was not yet meaningful. These kinds of small things are meaningful when the overall situ is... not that bad. When there is massive unemployment, a collapsed economy etc, it's not time for trying to juice entrepreneurship, its economic emergency ward time.
That is, an appropriate time for massive state intervention in the form of employment programs and the like.
Posted by: The Lounsbury at July 27, 2005 11:27 AM