Weak governance [Archives:2007/1114/Opinion]

December 24 2007

Dr. Abdullah Al-Faqeeh
Hadi Al-Asfahani, who is a Professor of Economics in Ailoney University in the United States of America came to Yemen in early 2006 in an attempt to give an answer to a question about Yemen, as required by the World Bank. The question is, “Why did the Republic of Yemen fail to achieve economic growth at a time the country had all the necessary requirements for economic development?”

According to Al-Asfahani, the Yemeni economy had at hand, by the advent of the Third Millennium, multiple opportunities and conditions, which were all implying that the economic situation is due to improve.

During the final decade of the Second Millennium, Yemen's economy absorbed the economic effects that resulted from Reunification of the country, repatriation of expatriates and the Civil War, and reached an annual growth rate estimated at 2.5 percent.

Several reforms, related with trade and economic stability, have been implemented while the country was about to carry out many partial reforms, believed to help increase the country's capacity to reach high economic growth rates and alleviate poverty.

Yemen's returns from oil grow greatly thanks to price rises of oil at the international markets. And, thanks to increasing returns of hard currency, the country has become more able to import several commodities from abroad.

At the political level, Yemen experienced much more liberalism and openness, as well as stability, thereby allowing leaders and ruling political forces to stay in power for many years.

Under those conditions, Yemen was expected to attain prompt improvements in the investment climate and attract a great deal of foreign investments into its territory, Al-Asfahani said. Consequently, the Arab country was projected to attain an unprecedented economic growth better than it did during the first decade of the age of the Republic of Yemen or the Unity State. But, what had already happened is that performance achieved within the new circumstances was disappointing by all means.

Such a failure to achieve a projected economic growth raised international concerns about the status of the poorest country and its opportunity to maintain stability.

The international concern about Yemen originates from the fact that the country's national economy heavily depends on oil exports while, according to geological studies, oil in Yemen is expected to deplete within the coming few years.

In event the current economic situations continue, depletion of oil, according to experts, will lead to a collapse of export revenues, and consequently, the state's general budget will collapse too. Then, social conflict over limited resources will force both the political and social systems to collapse. This is usually referred to as failure of the state.

The poor youth, who are also illiterate and jobless, will constitute a barefooted army in the conflicts, which are due to break out as a result of a mistake committed by one of the political forces that rule the country. From Al-Asfahani's viewpoint, Yemeni peoples need not weapons, as they are available in abundance.

Al-Asfahani agrees with his predecessors of the researchers that Yemen's failure to achieve a high economic growth rate under suitable circumstances is primarily attributed to weak governance in the country.

This is obvious in several aspects, the most prominent of which are lack of transparency and accountability, rampant corruption and weak interaction between government officials and the private sector, coupled with the absence of good institutions that help enhance the role of market economy such as courts, and the government's poor performance.

Source: Al-Ahali Weekly