FOURTH ESTATE > Yasser Akkaoui, Editor-in-Chief, Executive Magazine

 

'If we learn one lesson from the financial melt down, let it be that the only capital worth investing in is human capital.'

What is required to ensure economic stability in the region, particularly given the global financial meltdown?

“The concept of economics is very easy. Most economists today would agree that to appraise the economic health of any country, we must assess its consumption. We have to look at how people are consuming and investing, we have to look at the size of consumption, and we have to look at consumer appetites. Accordingly, we have to understand that the improvement of an economy depends on spending.

Consumption is entirely dependent on income, income is entirely dependent on wages, and wages are entirely dependent on jobs. If one does not have a job, he doesn’t make a wage; if one does not make a wage, he doesn’t have an income to spend, and thus cannot contribute to the economy. This is why the unemployed become a burden to any economy.

Using this logic, the role of any government is two-fold. First, the government must maximize the utility of its existing human resources. By minimizing unemployment, or creating as many jobs as possible, the government will increase the number of wages being paid, and therefore, incomes made and spent. This works as an immediate strategy for any economy of any state.

Second, the government must invest in its existing human resources, developing them so that they can not only adapt to ever-changing global economic realities, but also to increase efficiency, productivity, sustainability, and worth. When human resources are of greater value, the total amount of wages paid will increase, income will increase, and consumption will increase, accordingly.

Though it sounds easy, we remain unable in the Arab world to organize ourselves and achieve these two critical objectives, yet everything is dependent on this equation. If we learn one lesson from the financial melt down, let it be that the only capital worth investing in is human capital.”

What role can educational organizations or social organizations play in generating social progress in the region?

“We cannot rely on education alone to propagate social progress. To do so requires that various institutional players unite, including wise Ministries of Economy & Trade, Finance, and Labor.

Ministries of Labor are mandated to provide clear and accurate information regarding unemployment and the active population in a specific economy. At the same time, the Ministry of Economy & Trade and the Ministry of Finance must function together to provide the right environment which will promote investment in specific fields, and also create employment.

Furthermore, Ministries of Education must peg their educational systems to the best available around the globe and, on a competitive level, provide the finest possible education to their youth. Such a system, in turn, will yield citizens who contribute positively to an economy instead of those who simply graduate and become a burden to it.

Countries like UAE, who boast high levels of human development, are just disguised dysfunctional systems. There is no unemployment; the labor market is based purely on foreign labor. You either have a job, and you work and consume, or you don’t have a job and you return home only to become a burden unto your home country. UAE, and Dubai specifically, is a great model of a bad example.

Today’s biggest challenges remain in Saudi Arabia, the Levant, Oman, the North African nations, and Iraq. The least we can expect are mature, well-focused, governments that give the current economic problems the importance they deserve and act promptly, putting together strategies and action plans, that address our economic problems by creating synergies among all these Ministries and others. At the end of the day, dealing with economies from this perspective is the cheapest way. Education is the cheapest economic strategy and labor economic principles have proven to work.”

 

Yasser Akkaoui represents the interests of EXECUTIVE Magazine, Middle East’s most respected economic and trade publication since 2001. He strives to ensure that EXECUTIVE continues to be the leading business publication in the region, reaching the highest level of journalistic integrity. He is the founder of the Center for Strategic Studies, a non-profit organization engaged in awareness creation on employment concerns and resources development strategies for the 21st century.  He is also the founder of Capital Concept sal, a business development advisory firm that in addition to its consultancy services is specialized in fundraising for Civil Society initiatives clients include: World Bank’s Middle East and North Africa Development Forum and UNDP’s/LCPS Conflict Transformation and Prevention initiative. Yasser created PrimeJob, a headhunting agency working alongside some of the biggest companies around the Middle East and also a Management and Entrepreneurship instructor at The American University of Beirut, exposing students to real life case studies that help them assess opportunities in regional economies and adapt their decision making to the ever changing business environment in the Middle East.

 

THE FOURTH ESTATE > Valiya S. Sajjad, Reporter, Arab Times, Kuwait

“The summit is a great idea because a rethink at a regional and global level on the current economic order is a must for us to be able to really disentangle the complexities of the economic crisis.

Already economists around the world have begun to interpret the crisis on the basis of their schools of thought. Marxists are celebrating the sharp increase in the sale of Das Kapital in Europe, and think it prefigures Europe returning to socialist values that it abandoned following the disintegration of the Soviet Union. They are assuming a told-you-so attitude, and blame the inherent flaws in the capitalist order for the crisis.

On the other hand, there are Islamists who blame the excesses of a free market economy with lax regulations that blew up bubbles that broke. Islamic banks took the least direct hit from the subprime mortgage crisis, which is considered the starting point of the whole downturn, they argue.

At the other extreme, we have proponents of free market economy like Francis Fukoyama, who stubbornly support liberal economy and argue that it is the foundation for liberal democracy. In his book ‘End of History’ he makes a strong case for neo liberalism and even interprets it as the final stage in the evolution of man’s political and economic system. Whether his model is explained by Hegelian dialectics is not known.

These may sound like very fundamental issues, and I wonder if the summit will even attempt to address them. The focus is going to be more on what the ME countries are going to do to weather the crisis and come out of it unscathed.

I think the Arab countries must stop acting as rentier states and free themselves from their dependence on western economies. They must also focus more on diversifying their economy without heavily depending on any one revenue source, such as oil.”