Understanding why North African economies are not growing as dynamically as they possibly could to generate enough jobs is a key question.
The present report argues that growth processes may not only be influenced by the allocation of resources between sectors (the classic view on structural change) but that efficient resource allocation within sectors is critical for growth and job creation.
However, North African economies often suffer from distortions which hamper the productivity. Using insights from the economic literature we measure these distortions through high productivity dispersion at the level of firms. If some firms in the same sector are much more productive than others then this is a possible sign for distortions holding back firm growth.
This report provides recommendations to tackle the negative effect of inefficient institutions on resource allocation in North Africa. These recommendations encompass governance issues, such as the building of checks and balances through national and local institutions, strengthening the effective State capacity to reduce arbitrary behavior from bureaucrats and increase transparency. They also englobe measures to reduce credit constraints and attract FDI.
The report tries to introduce the latest literature on misallocation into the policy debate. The result is a relatively technical and dense reading which will be most appreciated by economists who know the recent Macro literature on the issue. However, we tried hard to explain the issue to non-economists as well and, most importantly, we bring a wealth of data to the issue which we collected across many different sources and compiled for this report.
The report can be downloaded here. The UNECA webpage offers a summary and link here. For readers only interested in the take-aways I recommend in particular the section 6 and in particular, "6.2 Policy implications".