São Paulo – This Friday (27th), the Organization for Economic Cooperation and Development (OECD) and the World Economic Forum published a study on foreign direct investment (FDI) in the Middle East and North Africa. According to a statement issued by the OECD, the report advises for investment in the region to be diversified away from the oil and gas industry and allocated to areas that will enable further job creation.
According to the document, two thirds of the FDI in the region goes into oil and gas, which is capital-intensive but does not create as many jobs. Although investment has increased a lot over the last decade, the survey informs that unemployment rates remain high in the Arab world, and exceeds 40% among young people in certain countries.
The OECD claims that the causes for the FDI’s low impact on the labour market include an underdeveloped private sector and a gap between companies’ needs and labour force skills.
The survey suggests that local investment promotion agencies should encourage businesses with stronger potential to create jobs. He underscores that new projects create further jobs than do mergers and acquisitions of local businesses by foreign companies.
To the OECD, policies should be established to train workers, soften up excessively strict labour laws, further integrate women into the labour force, increase the commitment of foreign investors to local suppliers, promote high value-added industries, fight corruption, and encourage responsible business conduct.
According to the OECD, the survey updates the Arab World Competitiveness Report issued last year, which posits that political change stemming from the Arab Spring must be coupled with economic reform to address the “roots” of the protests that swept the region in 2011. That means creating jobs for 2.8 million youths entering the labour market each year.
*Translated by Gabriel Pomerancblum
