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Is industrialization MENA’s missed opportunity?

[photo]
Clara Capelli came to LAU through an Erasmus Mundus scholarship to complete her thesis.

May 15, 2014—

Clara Capelli is a Ph.D. candidate at the Department of Economics and Business of the University of Pavia, Italy. A visiting professor at LAU’s Department of Economics since September 2013, Capelli has been investigating the phenomenon of the missed stage of industrialization experienced by the whole MENA region – jumping directly from rural societies to service-driven economies – and the impact on its job creation and absorption capacity. MarCom wanted to know more:

MarCom: Why is industrialization important for a country’s economy?

Clara Capelli: In fact, industrialization is not only the process of building steel factories; it’s more about manufacturing the things that you can use and consume. My research aims at highlighting the importance of “productive structure.” In other words, if you base your economy mostly on real estate and services, this will have very specific consequences on growth, employment, trade, etc. For instance, and this applies to the Lebanese case, producing very little domestically makes the economy dependent on imports, without having much in the way of exports to compensate. If your manufacturing activity is limited, even aspects like research and development as well as innovation will be modest. As a consequence of this, your growth will be negatively affected and this spills over into employment and job creation.

MarCom: Why do you think the MENA region skipped over the stage of industrialization?

Clara Capelli: In the MENA region, mass industrialization policies in the 1960s-1970s failed and were replaced with a huge wave of liberalization and privatization measures that didn’t succeed in effectively boosting and re-launching the economies at stake. In more recent times, the boom of the real estate and the financial sector has diverted all the resources into these economic activities, perpetuating the cycle.

MarCom: What are the consequences today for the region?

Clara Capelli: I think that the whole MENA region simply cannot offer enough job opportunities to meet the number of job seekers pouring into the labor market every year. This means that unemployment is not always a problem of the employability of people because of a lack of desirable skills or the difficulties of finding a market for degrees in fields such as humanities, but perhaps something that can also be explained by a productive structure that does not perform well in terms of job absorption. This in turn pushes people either to make their own living in the black market as shoe-shiners and street vendors or simply to emigrate.

MarCom: Is there a way to remedy such a negative pattern?

Clara Capelli: This is a long-term problem and its resolution will not come about overnight. Still, the daunting figures of unemployment from all around the region require an immediate intervention of some sort. A good start would be to promote programs that support self-entrepreneurship, such as courses, grants and loans to start businesses and the like. There are many examples that have been set in this regard, including Education for Employment or even Souk Attanmia, an initiative implemented in Tunisia by the African Development Bank, which has been yielding very good results.

MarCom: What brought you to LAU and how would you say this has shaped your research?

Clara Capelli: I was awarded an Erasmus Mundus scholarship to come here to finish my Ph.D. thesis as part of the Dunia Beam project. My colleagues have been a tremendous help. Collaborating with them and listening to their advice and guidance has been invaluable to the focus of my thesis. Of course, studying the economics of the region, while living and working in it, is also an incredible advantage, especially with my access to the library and facilities here at LAU.


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