The 2017 version of “Economic Freedom of the Arab World” assigns outstanding marks for most of the Gulf states.

The report provides rankings for all Arab nations including the Palestinian Territories.

The study is co-published by the Friedrich Naumann Foundation for Freedom of Germany, International Research Foundation of Oman and Frazer Institute of Canada. Reflecting the views of its co-publishers, the report considers governmental involvement in the economy as something of a negative for its misallocation of resources.

The public sector is sizeable across the Gulf with governmental spending making up at least one-third of the gross domestic product (GDP), and quite high by international standards. When competing with private sector firms for business, public sector establishments could crowd out businesses by getting preferential treatment.

The index relies on some 40 variables, grouped into five broad areas of economic freedom. These consist of 1) size of the government in terms of expenditures, subsidies and investments; 2) legal system and property rights with regards to impartiality of the judicial system as well as enforcement of contracts; 3) sound money policies in regard to inflationary threats and supply growth; 4) freedom to trade internationally without too many tariffs and capital control; and 5) regulation of the credit market, hiring practices and minimum wages.

The results show both Bahrain and the UAE tying for the best spot, with a score of 8 out of 10 points Both are noted for having business-friendly laws and in their appreciation for entrepreneurs and foreign investments. UAE’s strengths entail limited business regulations.

Bahrain is noted for steadily reforming the labour market by focusing on granting exceptional rights to immigrant workers. The latest move allows those overstaying their working permits to apply for a two-year permit on the condition of paying all associated fees. This way the immigrant worker is not required to be associated with any employer but can use the opportunity to become self-employed.
Appreciation for free trade

An earlier law grants immigrant workers the right to change their sponsor under certain conditions like completion of the contract and if not in receipt of salaries on a regular course.

Kuwait gets the fourth spot after Jordan, with Qatar tying with Lebanon for fifth. Oman is ranked eighth after the Palestinian Territories. Also, Saudi Arabia is in 10th after Somalia.

It is entirely convincing that there is more appreciation for free trade in Somalia than in Saudi Arabia. Anyway, the kingdom is undergoing a change of policy and directions leading to a projected emergence as a high-tech hub. Named Neom, the town is to span 26,500 square kilometres on the borders with Jordan and Egypt.

The plunge in oil prices has strengthened the conviction to enhance the role of private sector investors. Where possible, the authorities feel the need to cut expenditures due to pressures on revenues. The private sector is looked upon to fill in the vacuum.

Understandably, the report highlights the dangers associated with unemployment in the Arab world, believed to be hovering at around 30 per cent. The Arab Spring that started in Tunisia in late 2010 was due to problems in the job market.

Economic freedom can help expand economic activities and enhance the chances for job opportunities. It is a prerequisite for economic success.

— The writer is a member of parliament in Bahrain