Spatial Governance and Spatial Disparities in the Middle East and North Africa (MENA)

1. Spatial Governance and Spatial Disparities in the Middle East and North Africa (MENA) Dark spaces are lagging areas. Publication due April 2010

2. The 2009 World Development Report No country has grown rich without agglomeration

3. But how to get agglomeration without unacceptable spatial disparities? • Good development policies everywhere: “institutions”. • Connectivity to link metropolises, cities and villages: “infrastructure”. • Spatially-targeted interventions, where divisions prevent migration to leading areas: “incentives”.

4. Plan of presentation • What’s the lagging area governance question in MENA? • What kind of lagging areas do we have? • What do “institutions”, “infrastructure” and “incentives” mean in MENA? • A way forward.

5. A. What’s the lagging area problem in MENA?

6. enterprises move in agglomeration efficiency economies of location We start with a cycle of economic agglomeration… • Explicit policies • Economic incentives • Poor track record Policy response

7. But what if we add politics ? Politicians’ concerns : spatial inequality = migration to the cities, = urban unemployment, = religious radicalism = political opposition = a colonial vestige

8. * interior ministry sector ministry sector ministry governor governor sector directorate sector directorate sector directorate sector directorate Does spatial history … • C19th – 1950s: Limited geographical spread of colonial settlement. Investment concentrated in port cities and administrative capitals. • Post-independence: consolidation of unitary administrations on governorate model.

9. … tell us where we are now ? • 1960s-70s: state-led industrialisation strategies: regional and metropolitan preferences. • 1990s-2000s: fiscal constraints undermine governments’ ability to guarantee livelihoods: perceptions of exclusion from growth.

10. Now is it the squeaking wheel … Political support for government is weakest in large Egyptian cities. Source: World Values Survey

11. Implicit taxation of farmers until 1990s: forced deliveries (rice) and low prices (cotton). Central transfers to governorates not compensating for differences in tax base. 36% of government spending on energy subsidies (2006). Local govt share of spending 22% to 16% 1996/7 to 2005/6. Sanitation coverage. Cairo 98%. Qena 10%. … that gets the oil ? Egypt .

12. T The twin cycles of spatial governance

13. 18 of 30 The spatial balance of the provision of public services in my country … Has always been appropriate. Has always favoured the metropolitan area at the expense of outlying areas. Has favoured the metropolitan area too much in the past, but this is no longer the case. Has always favoured outlying areas at the expense of the metropolitan area.

14. Conclusion … The region needs policies for lagging regions that • respond to the political demand for reduced disparities in welfare • without sacrificing the growth benefits of agglomeration. But which policies?

15. B. What kind of lagging areas do we have?

16. Spatial Disparity Diagnostics for MENA.4 empirical questions with policy implications • Is there really a major spatial component of inequality? • Is my lagging area a low-density fringe or a high-density pocket? • Is internal migration mitigating disparities fast enough (or is there “division” ?) • Does my lagging area have unrealised potential?

17. Rural-urban disparities of vast significance in some countries, negligible in others. Morocco’s rural-urban divide is a key component of inequality. Syria’s is not. P:/…/sommeiller ELMO Nov08.xls

18. Share of spatial disparities explained by household characteristics Rural-urban per capita expenditure differences explained by differences in household size, and gender, age and education of household head: Jordan’s spatial inequality is explained by household characteristics. Djibouti’s is not.

19. Is internal migration eroding disparities? Tunisia’s internal migration is eroding inter-provincial disparities. Iran’s is not. % of population in poorest 50% of “provinces”.

20. Water agglomeration makes…population agglomeration

21. Low-density fringe or High-density pocket? pocket pocket fringe

22. C. What do “institutions”, “infrastructure” and “incentives” mean in MENA? Institutions: correcting a historical metropolitan bias in spatial governance Infrastructure: more efficient use of existing hardware Shifting targeted development interventions from subsidisation to catalysis.

23. Sectoral studies are describing spatially equitable policy directions for: • Public expenditure management systems • Education • Health • The business environment • Roads • Cellular and broadband connectivity

24. C(i) Correcting historical metropolitan bias in institutionsExamples of findings • The politics of proximity, confirmed by cross-country econometrics: formal political accountability mitigates spatial polarisation and urbanisation. • Adjusting public expenditure. e.g. from commodity subsidies to targeted social protection (>20% of public spending on fuel subsidies in 2007). • Adjusting business environment: e.g. Morocco: differences in quality of institutions more important for productivity than agglomeration economies. • Health, education, sanitation, social protection: adjusting delivery architecture to remedy disparities.

25. C(ii)Efficient use of existing connectivity infrastructure • MENA’s concentrated settlements and trunk road density ensure trunk connectivity (except Yemen) • But “software” improvements can make the infrastructure more efficient. • road maintenance funding • border procedures • commercialisation of public transport and freight sectors

26. Travel Time to Major Cities Assuming Open Borders

27. C (iii) Shifting targeted development interventionsfrom subsidisation to catalysis. Lessons from developed countries and MENA. • Most targeted interventions fail. • Success stories have common features: • the national regulatory environment is favourable. • lagging area has market access + density OR location-specific resources. • The state’s key role is coordination within itself and with anchor investors. • Infrastructure without institutional coordination usually fails. • investment incentives to the private sector are rarely important and often counter-productive.

28. There is a role for political choice e.g. Centre-East Tunisia:

29. D. Lagging areas in MENADiagnostics………………..& Policy Package Major spatial component of inequality ? yes Is migration making the problem disappear fast enough? (“Institutions”)-------(”Infrastructure”)-------(”Incentives”) no yes Level the playing field for development Low density fringe area? no Improve efficiency of infrastructure use High-density, low-potential area? yes Level the playing field for development no Catalytic intra-governmental and public-private development coordination Improve efficiency of infrastructure use High-density, high-potential pocket area? yes Level the playing field for development