As chapter 2 documented, authorities in the region have struggled to uphold their end of this redistributive social contract, suggest-ing that their policy menu needs to be revised.
This chapter does not negate the importance of redistribution but argues that convergence
objectives have been pursued in spatially biased ways that limit achievement of the objective.
This section analyzes the policies that Middle East and North Africa governments have used to uphold their end of the social contract, focusing on efforts to encourage (a) convergence in access to basic services (for which the dominant strategy has been top-down allocation and planning of public investment), and (b) convergence in service quality (mainly pursued through central-ized mechanisms of service delivery). The section presents evidence that these policies are characterized by excessive centraliza-tion of capacity, resources, and decision-making processes, which undermine convergence objectives by reinforcing spa-tial disparities.
Centralized response 1: Top-down allocation and planning of public capital investments results in fragmented or uncoordinated development
To assess the robustness of the Arab Barometer data analyzed in this section, we analyzed World Values Survey (WVS) data for Middle East and
Tunisia
0 20 40
Percent Percent
60 80
West Bank and Gaza Morocco Lebanon Jordan Egypt, Arab Rep.
Algeria
a. Importance of job creation
Urban Rural
Tunisia
0 20 40 60
West Bank and Gaza Morocco Lebanon Jordan Egypt, Arab Rep.
Algeria
b. Importance of public services
FiGURE 5 .2 Rural respondents were more likely to cite government’s role in job creation and public service provision as essential characteristics of democracy
Percentage of respondents selecting answers in multiple-choice format
Source: Arab Barometer Wave IV, 2016.
Note: Preferences reflect respondents’ selection of one statement from each of four sets of answers to the question (Wave IV, no. 515): “If you have to choose only one from each of the four sets of statements that I am going to read, which one would you choose as the most essential characteristics of a democracy?” Categories shown summarize each choice described.
Source: Arab Barometer Wave IV, 2016.
Note: Preferences reflect respondents’ selection of one statement from each of four sets of answers to the question (Wave IV, no. 515): “If you have to choose only one from each of the four sets of statements that I am going to read, which one would you choose as the most essential characteristics of a democracy?” Categories shown summarize each choice described.
a. Egypt, Arab Rep.
0 20 40
Percent
60 80 100
Luxor AswanQena SouhagMeniaAsyut AI FayoumPort SaidMnoufiaSuezGiza Kafr AI ShiekhAI BouhiraAlexandriaBani SwifQalioubiaDamiettaDakahliaSharqiaGharbiaIsmailiaCairo
c. Lebanon
0 20 40 60 80
North
South Mount Lebanon Bekaa EI Nabatieh Beirut
Percent Ma’an
Madaba Ajloun Jerash Mafraq Karak Aqaba Amman Tafilah Zarqa Balqa Irbid
b. Jordan
0 20 40 60
Percent
d. Morocco
0 20 40 60 80
Oued Ed-Dahab-Lagouira Laayoune-Boujdour-Sakia El Hamra Guelmim-Es-Semara Souss-Massa-Draa Doukkala-Abda Marrakech-Tensift-AI-Haouz Tadla-Azilal Chaouia-Ouardigha Grand Casablanca Rabat-SalÈ-Zemmour-Zaer Gharb-Chrarda-Beni-Hssen Meknès-Tafilalet Fes-Boulemane Oriental Taza-AI Hoceima-Taounate Tanger-Tétouan
Percent
0 Relizane Ghardaïa Na,ma Aïn Témouchent Aïn DeflaTipasaMila Souk AhrasKhenchelaTissemsiltEI QuedEI Taref BoumerdËs Bordj Bou ArréridjOum EI BouaghiSidi Bel AbbesTamanghassetMostaganemConstantineTizi OuzouEI BayadhLaghouatMascaraTlemcenOuarglaGuelmaAnnabaTbessaMedeaBécharBeskraSkikdaAlgiersBouiraM’SilaSaidaDjelfaBatnaTiaretAdrarChlefOranBlidaBejiaSetifJijel
20 40
Percent
60 e. Algeria
Percent Tunis
f. Tunisia
0 20 40 60 80
Manouba Ariana
Nabeul Bizerte Jendouba Ben Arous
Zaghouan
Gabes Kasserine Kef Seliana
Kairouan Sousse
Mahdia Sfax
Sidi bouzid
Mednine Tatouine Gafsa Tozeur Kebili Monastir Beja
Percent Jenin
Tobas Taulkarm Qalqilia Salfit Nablus Ramallah Jerusalem Jericho Betlehem Hebron Jabalia Gaza City Khan Younis Deir al Balah Rafah
0 20 40 60
g. West Bank and Gaza
80
Jobs Public services
Percentage of respondents selecting answers in multiple-choice format
North Africa economies. Although it does not include a question identical to the one analyzed from the Arab Barometer, an analysis of some-what comparable questions and answers from the WVS reveal consistent perceptions (box 5.1).
The governments of the Middle East and North Africa have made sizable public capi-tal investments in recent years as a key tool for pursuing convergence in access to
basic services. Chapter 4 documents a func-tional imbalance between government spend-ing on infrastructure (especially place based) and spending on human capital (social ser-vices) in the region’s countries relative to comparator economies.
Indeed, sizable public infrastructure invest-ments have been a hallmark of several of the The WVS Wave 6 (2010–14) collected data about
what people consider “the most important aims of the country” (figure B5.1.1). It appears that people consider economic growth, by far, to be the main objective that their countries and governments should pursue. This corroborates the strong weight given by Arab Barometer respondents to their
governments’ responsibility in enabling economic development (that is, jobs). Unfortunately, neither the subregional data nor the urban versus rural seg-mentation is available from the WVS for the Middle East and North Africa countries, so we cannot com-pare subnational results with the Arab Barometer.
BOx 5 .1 Comparing Arab Barometer and World values Survey responses on government’s role
0 20 40
Percent
60 80
Bahrain Algeria
West Bank and Gaza
Jordan
Lebanon
Libya
Morocco
Qatar
Tunisia
Egypt, Arab Rep.
Yemen, Rep.
Iraq
Prestige Economic growth Security Freedom
FiGURE B5 .1 .1 WvS respondents from most Middle East and North Africa economies identified economic growth as the country’s “most important” goal
Percentage of respondents selecting answers in multiple-choice format
Sources: World Values Survey Wave 6 (2010–14 and 2015 datasets), World Values Survey Association 2015, http://www.worldvaluessurvey.org/WVSDocumentationWV6.jsp.
Note: WVS = World Values Survey. Respondents selected from several choices in WVS Wave 6, question no. V60: “People sometimes talk about what the aims of this country should be for the next 10 years. . . . Would you please say which one of these you, yourself, consider the most important?” Categories shown summarize each aim described.
region’s governments in recent years, including recent major infrastructure projects in Egypt and megaprojects in Saudi Arabia. This focus on infrastructure is prevalent even in the social services, with recent evidence showing that the education budgets of many of these countries heavily emphasize capital investments (such as construction of new schools, rehabilitation and expansion of existing facilities, or pro-curement of school equipment) rather than other learning inputs. Qatar, Kuwait, Morocco, and Lebanon respectively allocate 24 percent, 21 percent, 13 percent, and 13 per-cent of public education spending to capital investment—much higher shares than the Organisation for Economic Co-operation and Development (OECD) average of 7.6 percent (World Bank 2018d).
Yet in most countries in the region, deci-sions regarding the geographic allocation of investment expenditure are made by sectoral ministries within the central government, with little agency left to subnational govern-ments. For example, in Egypt in 2016, local administration expenditures on nonfinancial assets for local development activities repre-sented only 3 percent of total local adminis-tration spending, reflecting that most local investment expenditure in Egypt is decided and implemented by central government agencies (Amin 2016). Likewise, in Jordan, sectoral investments are generally planned at the central level with limited attention to optimizing those investments across sectors or applying a territorial planning framework (World Bank 2018a). Even in Tunisia, which has decentralized greater decision-making authority to local administrations, five-year municipal development plans make up the sum of all municipal investment programs but account for only 10 percent of total investment in urban infrastructure. The remaining 90 percent is based on national development plans financed and implemented directly by line ministries and state-owned service enterprises. This can lead to sectorally fragmented or uncoordinated investment planning and funding decisions, without an integrated view of regional and local priori-ties for socioeconomic development.
A related challenge is that the region’s gov-ernments have tended to proliferate rather than consolidate their subnational govern-ment units, hindering their ability to take on a coherent spatial and regional development planning role. In Saudi Arabia, for example, the historic region of Hejaz is now split between four governates. Iraq similarly took a much simpler preindependence structure and multiplied the number of governates.
Lebanon is an extreme case, with more than 1,100 municipalities (baladiyat) and some 53 unions of municipalities, many of which have fewer than 10 member municipalities. The small size of these subnational units, their lack of local identity, and their upward-facing accountability pose significant obstacles to their viability as socioeconomic layers and removes what would otherwise be logical cou nter pa r t s for spat ia l ly oriented interventions.
Centralized response 2: Service delivery mechanisms favor primate cities, especially political capitals
In the pursuit of convergence in service quality, most Middle East and North Africa countries have committed to decentralize authority for service delivery to local bodies.
Internationally, local authorities such as municipalities and city councils are com-monly made responsible for delivering basic services to citizens, and they are generally viewed as the first and best contact points between the citizenry and the government apparatus.
T he “I nternational Guidelines on Decentralisation and Access to Basic Services for All,” approved by the Governing Council of the United Nations Human Settlement Programme (UN-Habitat) in 2007 and 2009, outline an international consensus that the decentralization of responsibilities, policy management, decision- making authority, and sufficient resources to local authorities are require-ments for effective and sustainable service delivery (UN-Habitat 2009). Several Middle East and North Africa countries have
recently made important advances in imple-menting a decentralization agenda—
including Lebanon and Tunisia, which both held long-awaited local elections in 2018.
Nonetheless, local government systems in the region remain mostly deconcentrated rather than decentralized,4 mirroring the excessive concentration of the region’s urban systems. Chapters 1–3 of the report docu-mented how territorial development in the Middle East and North Africa is character-ized by economic and demographic primacy of the main city (spatial fragmentation within the urban system). This is the legacy of the political economy and administrative arrangements of the Ottoman Empire, which concentrated public services and tax revenues in capitals and neglected lagging regions (World Bank 2011). Subsequently, colonial powers developed metropolis- and export-oriented economies that encouraged coastal agglomeration and hindered the development of effective administrative institutions (Brixi, Lust, and Woolcock 2015). This is especially the case in the Mashreq subregion, where the excessive urban primacy and underdevelopment of secondary cities seem to have been predomi-nantly the consequence of political bias (as further discussed in chapter 3).5
High population growth, migration-driven rapid urbanization, nondemocratic and centralized political government, and colonial history have all been identified as factors driving further urban concentration (Faraji 2016). Politically centralized regimes in low- and middle-income countries tend to provide better services and safety in the cap-ital city and give more attention to that local population. As such, there is evidence that migrants settling in the primate city come not only from rural areas but also from small towns and medium-size cities (El-Din Haseeb 2012). As highlighted by Henderson (2002), primate cities that are also political capitals are on average 25 percent bigger than primate cities not concentrating politi-cal power.
The legacy of this centralized structure of service provision and decision making is still
visible in the region’s public administrations today, particularly in the Mashreq subre-gion. The public administration system is highly centralized in most of the region, with deconcentrated units of the central government providing some services directly (particularly health and education), while basic services are provided by field offices of line ministries or governorates, districts, and municipalities (UCLG 2010). Although local governments are usually run by elected councils, they typically have limited author-ity over the services they are mandated to provide. Their role mostly consists in carry-ing out service delivery decisions made by the central government and performing lim-ited functions such as library and park ser-vices, street paving, street lighting, and garbage collection (UCLG 2010). Figure 5.4 summarizes the territorial governance struc-ture typical of the different Middle East and North Africa subregions. The fiscal decen-tralization indexes calculated by Ivanyna and Shah (2012) suggest that the Mashreq subregion is significantly less decentralized than the Maghreb subregion, particularly in the cases of Egypt, Iraq, Jordan, and the Syrian Arab Republic, as further shown in chapter 3.
These decentralization patterns have resulted in a general mismatch between fiscal centralization and functional devolution of responsibility for delivering basic services.
Two common metrics of decentralization in cross-country comparisons are the relation-ship of subnational revenues and expendi-tures to national totals. Central transfers continue to be the main source of local finance, and the share of local expenditures in total government spending remains low (figure 5.5). As a result, municipalities run perennial operational deficits. Where they exist, the various local taxes, fees, and per-mits that constitute the bulk of local revenues cover a small portion of the budget and go almost entirely to salaries and operations and maintenance. Municipalities have little flexi-bility in adjusting the rates and mechanisms for levying fees for public services to reflect the real costs of service provision.
The reliance on central transfers to cover local deficits and finance capital projects makes funding local initiatives and projects a pervasive problem. The main exception to this in the region is West Bank and Gaza, where 90 percent of property taxes (collected directly in Gaza or indirectly through the Palestinian National Authority in the West Bank) go to municipalities, which in turn depend on central transfers for only 15 percent of their total revenue (World Bank 2017c). Maghreb countries, particularly Morocco, also tend to have somewhat greater financial autonomy at the local government level—including some extent of commercial subnational borrowing.
This highly centralized administrative structure has led to uneven spatial develop-ment. The implication of this centralizing approach for spatial disparity is confirmed by
econometric analyses of spatial imbalances in the Middle East and North Africa compared with other world regions. World Bank (2011) presents statistical evidence that countries with centralizing governance characteristics tend to follow a more spatially concentrated development path.
In related research, Kremer, Mijiyawa, and Whitmore (2012) find a strong negative correlation between (a) a political rights index, in which the Middle East and North Africa ranks lower than other world regions;
and (b) a spatial agglomeration index (an indicator of the concentration of economic activities, which the authors use as a proxy measure for spatial imbalances), in which the Middle East and North Africa ranks higher than other regions. This research concludes that an increase in political rights and a greater sharing of political accountability
Fiscal decentralization
GCC
• Saudi Arabia: Regional councils headed by emirs (appointed by the king) oversee governorates, districts, and municipalities.
• Smaller GCC countries:
municipalities are branches of the central government.
• Quasi-totality of municipal funding is provided by the central government through fiscal transfers.
Mashreq
• Governorates focus mainly on public order and serve as the provincial seat through which deconcentrated units of line ministries plan and coordinate investments or provide services.
• Central governments largely maintain control of financial resources.
Functional and fiscal decentralization
Deconcentration
Functional decentralization
Maghreb
• Countries are divided into governorates headed by an appointed governor;
municipalities have elected councils legally enabled to approve plans, development projects, regulatory controls, and local budgets, with varying degrees of political and administrative autonomy.
• Central governments control finances but the elected councils of municipalities can approve local budgets.
West Bank and Gaza
• Local governments are responsible for 27 functions including most public services commonly delivered at the local level.
• The budget system is truly decentralized.
Centralized territorial structure
Source: World Bank review of decentralization literature, including fiscal decentralization indexes by Ivanyna and Shah (2012).
Note: GCC = Gulf Cooperation Council, comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Maghreb includes Algeria, Libya, Morocco, and Tunisia. Mashreq includes the Arab Republic of Egypt, Iraq, Jordan, Lebanon, and the Syrian Arab Republic. Among the notable exceptions to these categorizations, the United Arab Emirates has a significant degree of fiscal decentralization.
FiGURE 5 .4 The subregions of the Middle East and North Africa represent a spectrum in the degree of decentralization
across a territory favors a reduction in spatial imbalances (World Bank 2011).
Of course, not all spatial imbalances are negative. Indeed, one of the major intellec-tual contributions of World Development R e por t 2 0 0 9: R eshaping E conomic Geography was the argument that dispers-ing production more broadly does not foster prosperity (World Bank 2009). However, this uneven spatial development is concern-ing because it contributes to spatial dispari-ties in living standards, as the next section discusses.